Podcast transcript: Can digitization of products and services provide relief during crisis

Introduction

Jeff Saviano

Hey. Better Innovation. It's Jeff. We are now well into season four and our theme of enterprise resilience. Today we have my friend and digital finance guru because everybody needs a friend who is a digital finance guru - Lawrence Wintermeyer is with us today in the studio on the show. Lawrence is the executive co-chair of an organization called Global Digital Finance.

They helped bring together global experts to engage policymakers and regulators and others to advocate for best practices in the industry. His career spans more than 25 years. He's not just a leader in the digital finance space. I really think he is the leader across the globe. We met a couple of years back in Davos at the World Economic Forum.

I feel like our visions are so well aligned. We share the same ideas for a better digitally connected world. Here we go. My friend Lawrence Wintermeyer.

Lawrence, welcome to the show.

Lawrence Wintermeyer

Lovely to be here, Jeff. Thank you for having me.

Saviano

Well, Lawrence, we're finally doing this today. I have to say, we've been thinking about this, you and I, since we met and how I'd love to have you on better innovation. And I'd like to start this interview today, Lawrence, by saying that if I was smart and I wasn't in this instance, what I would have done is not have to drag you into a virtual studio.

I would have just hit record on one of the many, many great conversations you and I have had over a few years now. I didn't do that. So you are here with us in our studio, and I want to thank you for that. But I'm so excited to have you in today.

Wintermeyer

Well, it's such a pleasure to be here, Jeff. And as always, I think that you've laid down the foundation here for better ways of working for us and some of our brain trust community in the future. We should just knock on record on the phone send it to, open source audio translate and mind the script, because we do so much thinking about a number of the topics that we're going to I know, discuss today that I do not have not thought of that. I think that's absolutely brilliant.

Saviano

I love it. Yeah. Let's just take it and throw it up to the cloud. And imagine just imagine the damage we can cause in the world with all of our conversations someplace in the cloud, like I've got to get my head around. I think we first met Lawrence that at Davos at the World Economic Forum.

I have a few other Davos friends, and they've been on the show over the past couple of years. I thought it may be a neat way to start. Paint a picture Lawrence, paint a picture for our audience of what it's like in Davos for the technologists and those interested in technology like you and me and the backdrop of where we met, which is on that famous technology promenade in Davos.

What's that like?

Wintermeyer

Well, I think that it's probably one of the best concentration of global tech, particularly my area of fintech. Crypto digital assets, blockchain that you could find. And I know many of us have missed it this year. But it is Davos in the promenade and it often has little to do with Davos, the organization in the White Badge community.

And I think that is probably a testament to Klaus in Davos in itself, that this whole separate community congregates on the promenade, and not that we don't pay attention to the main agenda. But, you know, there's a global tech agenda going on. And that's the one that we're running. And so there are hundreds of events all around the promenade.

And you and the EY team were really kind of hang out at mine last year. I know you and I are in The Digital Economist Brain Trust. And, you know, we've got a lot of common connections. But I think that to put it a very succinctly, it's one of the things I miss about Covid, you know, conferences where, you know, you've got one or two degrees of separation and you can just meet people who are actually influencing the space and you do 30 minutes face to face, particularly with people you don't know.

I think it's okay that you and I can dial up each other on Zoom and we know each other. But Davos, I always have five or six key meetings with global leaders and people I don't know. We press the flash, we become community pals. It helps us all network better. It's great that you mention it. Everybody's missed it this year.

And it is just, I think one of the premier networking events, particularly for what I'd call, you know, sort of West Coast Tech FinTech in the blockchain community.

Saviano

I think that's well said. I really miss it. We're recording this today in the first week of February, so it would have been last week. And we've got this new feature on my phone where pictures from a year ago will crop up like many people are experiencing that.

And all my Davos pictures have been coming up over the past week or so. And it's just this petri dish of ideas that germinate. And I come away, opening it up that I carry around. I've been taking notes for years in these moleskin notebooks, and I, I practically stole the thing up with ideas and new people mentioned the serendipity moments and so I miss it.

I really appreciate it staying connected with you. And we've had so many great ideas, exchanges and will do that again today. Well, Lawrence you really do it all. You are a journalist. You're a fintech expert and advisor, an investor. You have led non-profits. The focal points of your great career has all been around digital finance. And let's start at the beginning, Lawrence.

Tell your story. Where did you grow up? Where did you study university? I want the audience to get to know you a little bit.

Wintermeyer

Yeah, sure. I grew up in Canada, in Ottawa, which is the political capital of Canada. But Ottawa, when I was growing up through the seventies and eighties, we would have called Little Silicon Valley, my tail big on broadly where you know, we would look at mobile going these days, you know, a large number of software providers.

I actually studied business computing in college in an American college called Harassing. My big passion when I was younger. And I was very fortunate that my mother was, you know, really a big sponsor of all of the equipment that I had was music. And I played guitar. So I have lots of great musical equipment computing. I had virtually every early computer, including the first IBM computers and broadly data and gaming.

I was the first generation of gamers. I don't actually gamble or bet now. And in fact, I dislike when financial services when large institutions say we're making a bet on this market, particularly if it's not risk adjusted. I find that offensive. But I grew up learning to gamble and particularly getting beaten by Ottawa's very diverse community, get beaten up by great Lebanese backgammon players and certainly getting beaten at poker many other games by a lot of the Chinese and Indian students I was studying with.

But it was that combination of things that really make me long digital. And one thing that I would mention, certainly in the context of all of the stuff that's going on these days about, you know, retail trading, when I was 16 or 17, I was very focused on tech stock trading. I had a friend whose mother was a schoolteacher and who was a millionaire from stock trading.

She really looked down kindly at me mainly, and that I was polite and I dress and wore a tie quite often and he didn't. So, I was really focused on financial markets and it really is that amalgam of financial markets, securities computing, data gaming, all of the things that, you know, now, in retrospect, I think a lot of the reasons why I didn't, you know, or do the things I do make sense.

But it was fantastic. It was just, you know, it was a great halcyon time to be a young guy.

Saviano

If you buy into the 10000 hours concept of what it takes to be a leading expert in the world, starting with your own fintech journey at age 16, as you describe it, that certainly gets ahead of others. And in your native Canada, I'm sure there were many, many 16 year olds playing ice hockey in starting their 10000 hours and doing other things.
And so it is a rich cauldron of innovation. And you must have an enormous sense of pride where you see how prominent Canada is now in the advanced technology community and markets like Montreal and Toronto in particular, and how they are world class in the ecosystems that have emerged there.

Wintermeyer

I think all Canadians are proud Canadians. Canada is probably one of the most diversified and innovative countries you can find in the world.

And, you know, people always feel blessed to call Canada their home. I've actually lived in in the UK, in Europe for most of my adult life. I don't actually get back to two to Canada much these days. And in fact, when I first started working, I worked in the life, pensions and investment management software space and spent most of my time in the U.S. on the East Coast.
And that really started to drive my interest in global businesses. What I think Canada offers for most people as a great social model is a balance between what I would call American style capitalism with European style egalitarian social values. And I think it's difficult to explain to people, but as much as Canada has in common with its American cousins, you can find it has in common with its northern European cousins, particularly the U.K., the Scandinavian countries in Germany. And that's quite extraordinary, really.

Saviano

I think it's a great way to describe it. And I look at some of the reasons and we've got strong practice in Canada in my time spent there from an innovation perspective at universities like University of Toronto. And we got close to this, a great fintech startup that emanated from the law school, from Dr. Ben Alarie, was on the show back, I think, in season two talking about his startup, Blue Jay Legal.

And it's this incredible cauldron of universities and the private sector and technologists and government and the role that government can play in actually launching ecosystems like that and promoting it. We've had some other government officials come through our lab and we got a team from Scotland come through last year. And also Trade Minister Ivan McKee was on our show and looking at the Cambridge community, and we talked a lot about their desire in Scotland and other parts of Europe to build organizations and systems like that.
And how do you build those ecosystems. So that is wonderful. And I thought, Lawrence, if you could paint the picture a bit and tell our audience about what do we mean by digital finance, I suspect our audience most will get it, but paint the picture. What do we mean by digital finance and about what you do within that community?

Wintermeyer

Well, digital finance, I believe, is a broad topic, but it's certainly anything that, you know, was originally computerized. For many years right from the early days when, you know, folks called computing data processing that was particularly started in accounting number crunching and over the years really found its role in business applications. And I think the airline booking systems and those sort of reservation systems really probably accelerated, the business applications in computing, but digital these days and you know, I'm a big fan of Nicholas Negroponte.

You know, the first meeting at MIT Media Lab director who wrote Being Digital and I think it was probably in 1990 or thereabouts a book well before it's time, you know digital, I think really from my perspective in digital finance is imbued in a lot of what we're seeing right now, which is the pure digitization of products services and the ability for consumers to access them.

And so you need to think of a lot of different, you know, pieces to put that together, but simply your mobile phone, which is a supercomputer in your hand, which is connected to everything on the planet through a network connection and can access all sorts of data, runs applications that have a pretty good idea of what you're up to and what you're doing. That's pretty digital. If you can find a means of exchange on that for you and I to transfer money to each other to pay for our books, our food, you know, to pay for our mortgages, for that matter, that that settles pretty instantly and gets money to people right now with regardless of whatever sort of intermediated services are behind the scenes that the consumer particularly doesn't think about, that that's pretty digital.

So I know we speak about this, Jeff, in the context of even things like COVID 19 and relief. It would have been better if our digital community had been positioned to get money to people overnight rather than taking the weeks and months than it did. But I think that's a great use case for what being digital is and in financial services.

Saviano

That's right. And it is a great example today where we are in 2021 and the state of the world and in the importance of digital systems and the role that they played or frankly they didn't play in some aspects of the pandemic. I think sometimes it's easier to explain what something is by explaining what it's not and what digital finance is not the opposite of that. Our old antiquated analog systems that are not digitized that are paper based and it's incredible how much paper still exists in the world. I still remember we had a session in our lab with a representative from the World Bank and senior official from the Kenyan government, and it was very apparent how much paper actually runs through many countries and governments and private sector interfacing with that.

And so, the medium for so much of your great work today, Lawrence is the organization that you lead, Global Digital Finance. Talk about their mission.

Wintermeyer

I most certainly will. Global Digital Finance is a not for profit members association that was really born out of the early stage of the utility token craze back in 2017. And I had the privilege of being the CEO in something called Innovate Finance, which had been set up by the Prime Minister to Prime Ministers ago in the UK - David Cameron. Its job was to really try to promote the UK FinTech ecosystem them by openly collaborating with incumbents, the regulator, venture capitalist and you know, all of the ingredients that made that ecosystem vibrant and it was an absolute privilege to do that. But having come from industry, you know, and spent my career in industry, the not for profit side of advocacy became very important to me, mainly in that I realized, boy, I had a pretty cool network of, you know, policymakers, politicians as well as business folks and an early stage firms, and understood the requirements and the problems of each of those areas. So, having promised my wife I wouldn't do another not for profit, my community pal Simon Taylor at 11 FS, really on the first day I'd left Innovate Finance the first Saturday morning said the token market's nuts, were all long digital meaning that we're all for the safe and secure use of digital and the digital community for the benefit of society.

We need to do something about this sort of token market that's going nuts. Need to set up some standards. We need some taxonomies. We need some rules of the road or some governance. And so, we spent six months broadly crowdsourcing the best conduct standards we thought we could at the time with hundreds of global practitioners from, you know, the cool kids on the planet and the folks really doing stuff in the blockchain space right to very focused digital tests in the top tier banks. And at the end of the year, we got a mandate from what I would call our patron members for which we're grateful to county and why one of to set up and formalize the association. So, we're all about promoting the greater adoption of market standards and the use of crypto digital assets, but through the development of best practices and governance standards in a shared engagement forum.

So, it's the leaders of the industry working with the regulators who get perviews and who we integrate into all of our standard developments. And then, you know, simply, Jeff, to what end? We're all aware of the negative press that crypto and digital assets get. But, you know, the community is really comprised of ex regulators, ex tier one, derivative traders, ex technology folks from big, big organizations with a lot of new blood in the technology space.

And most of it is hugely responsible. So, it's developing standards at a pace that's greater than of many of the jurisdictional or supranational regulators and agencies. But reaching out to them saying, look, we want you to understand that we operate to a high level of conduct, but let us help you help us on the perimeter and on the regulation and policy side of things.
You know, I'm consumed with this. I think this sort of role that industry plays in regulation, policy and in government is all a very important part of the future. Regardless of what area of the economy or the government that we're thinking about, because it has a lot of hallmarks of success.

Saviano

I think it's also an important part of the story.

And thank you for that. It's so helpful. I think the audience will appreciate the great work that and hopefully and I would encourage our audience to go check it out and to see the important work and the, you know, not just the thought leadership but promoting action and promoting real change in the world. What I love about the story, too, of global digital finance is how when you formed it, you're filling a gap. There's a gap in the world. There was a governance gap. There was a need to be to have a new institution. That was the nucleus for pulling together the parties that you suggested governments and regulators in the private sector and other non-profits and multilaterals, that there was a gap in the world. And I think it's so important, Lawrence, for our audience today. Look where we are. We are in early February of 2021. We have other gaps in the world. There are other significant governance gaps. And clearly, we see multi-stakeholder network importance of assets being developed for those networks, but we don't really have the governance model. So, I just want to applaud you and others for forming institutions like this to really fill gaps.

And that work we're going through a period where I think my own belief we're going to need more of that. There's so many interesting aspects to your work, Lawrence, and I'd like to explore one particular topic, something that I know you care deeply about and you actually wrote about in one of your weekly Forbes columns. And just as an aside, I'd urge our audience to check it out.

Lawrence writes these terrific weekly articles for Forbes on a number of digital finance and crypto issues. This particular one that caught my eye. I'm a regular reader and the one that really caught my attention was one on the state of the UK economy in the pandemic and the impact on small and medium sized businesses. Now, there was one really troubling statistics in your piece that you shared. I'm going to quote you, if that's okay. “The National Federation of Independent Business predicts that one in five small businesses will not survive 2021, the year we just started without significant federal aid.” What will the economy look like with the hit like that to small businesses? And if you want to use the UK as an example, Lawrence, that's okay. I just I found that so striking and I've been so interested to ask you that question.

Wintermeyer

Well, firstly, thank you very much for your praise, Jeff, on the governance model. I'm delighted that you read the Forbes work. I really dedicate it to policymakers and people who are really passionate about, again, trying to get this juncture between industry and government operating better, really as a means of government for helping the future. I think the Federation of Small Business data is a bit shocking. I mean, their estimate on Kansas that 250,000 companies are at risk of collapsing this year in 2021. And that is definitely shocking, this is a UK entity. Market finance which is a platform in their own related survey data in the article for small businesses for a survey pool three and four small businesses expect not to survive in 2021 and a lot of this relates to clearly issues with liquidity cash flow and the stress of business is not performing as a result of COVID.

And I think you know just to remind everyone, the travel sector we're familiar with but the leisure sector which includes your local restaurants sports entertainment and retail in many parts of the world but certainly in the UK lockdown and lockdown again and the impact of that is profound and then, Jeff, we know we always talk about how the music doesn't stop in a forbearance system.

I don't think many people appreciate that in the forbearance system, which is you know, almost like Just-In-Time Finance, where, you know, I owe you money at the end of the month because you owe John money at the end of the month. And we've got this interrelated chain of payments that needs to be processed that when the music stops, we've got a pretty big problem on our hands. And then, you know, subsequently that issue with liquidity, not having money leads to stress. And a lot of the survey data that I've looked at, particularly around UK citizens forecasts that most people really only have, you know, one or two months of savings or liquidity in place anyway, so that the chain effect of stopping this forbearance system, which is what COVID 19 has delivered, has really created, I think, a series of profound impacts, including the stress of this.

Saviano

We're going to we're going to talk more about the stress, and it's something that we want the audience to hear from you about. But before we do that, just one other statistic from the piece, “25% of UK small and medium sized enterprises have to the point you just raised Lawrence has little to no savings.” So, they have little to no savings”. Resilience is very low. The pandemic is obviously causing unprecedented financial hardship. And there was one other statistic only this is the last one I'll throw out from the piece. Results of a survey were that most; some greater than 50% of small business holders feel that they won't survive in 2021. So even worse than the earlier statistic from the National Federation. What's so troubling about this Lawrence that this is from the business owners themselves, they believe most of them believe that they won't survive this year alone. Those enterprises employ a large number of workers in our economy. And the UK in particular. And that will have dramatic effect on employment. Well, unemployment's currently at 5% and a lot of this is extended through CIBLES, which is the government funding support and furloughing staff.

But you know, you're right, the Financial Conduct Authority, which is the financial regulator in the UK, basically has 12 million UK adults at a low level of financial resilience. So, you know, augmented to these statistics on businesses, small businesses, small and medium sized enterprises. It is pretty shocking, I think that people need to remember that we're fighting a global pandemic here. And our community friend Dante Disparte said something that really resonated to me early on in the pandemic, having a chat similar to this and said, you know, ‘we're fighting a 21st century global pandemic with masks and lockdowns, which are the tools of previous centuries.’ And that really stuck with me. And, you know, he's got a great background in FEMA, particularly in global insurance, reinsurance risk planning.

But we talk about fighting it and it is a fight. And so, I don't like using military analysis or analogies, but we are in a fight or flight situation. And I think it's important that we recognize we're in a fight situation. And when you're in a fight situation, leadership wins battles, abundance certainly beats scarcity in the context of putting the money in place to help get us over this. And most importantly, science beats rhetoric. So, if we can get all of those aligned in governance and with governor governments, you know, we've got something that is a viral pandemic. The mathematics of the time may mean that reaction time is a factor. And I think that's probably the most important thing if you're reading this data. And I know just what we all find is that, you know, gosh, even governments say, well, we're doing what we can.

We're working within the context of the current legislation. But their point often is so much systematic bias and that, look, we're trying to do something extraordinary, but this is the way we work. This is the way we get funding. I know the U.S. is focused on a 1.9 trillion funding bill right now in the Biden government. But, you know, we need to take some extraordinary steps here. It's a global pandemic.

Saviano

You hit on a few really important points. First of all, our friend Dante Disparte, who's the the policy leader for organization, formerly known as Libra, now known as Diem. Dante was on the show just almost exactly a year ago. We did a live recording from Davos and you're absolutely right and how troubling this is and how it fits within the overarching resilience framework.

Wintermeyer

Right.

Saviano

And what is on the minds of every board, whether it's private sector or government officials is what can we do to make institutions more resilient. And I know that that you think quite a bit about this connection between financial wellness and mental well-being. I'm so curious about the effects that small and medium sized businesses, if they were to collapse and the impact that that will have on the owners of the business and their workers, these are real people within those businesses. And talk a bit about this interconnection between financial wellness and mental well-being that you focus on in this article.

Wintermeyer

Mental well-being is probably one of the most important topics now that we've uncovered or disclosed in the 21st Century in that, you know, it's not shameful to speak about it. It isn't shameful to say that I'm under stress. It isn't shameful to have problems coping with the complexity of modern life. It isn't shameful in this case for communities and people to say, look, we're struggling. We don't have money. We can't pay our mortgages, we can't pay our bills. We're having a problem now feeding our families. And, you know, again, feeding children in the UK is certainly hit the headlines over the past few months. I know in the U.S. as well, food supply, particularly to people under the income line, is becoming an issue. And this doesn't rest very well Jeff with leading nations of the world. The leading wealthy nations of the world are now having a problem feeding their populations. And so, I think a lot more to do on this front. What I think I find surprising and this gets back to the way that, you know, most of us are trained or programed to respond in governments or institutions is that we've got control and governance and we tick the boxes. But when something extraordinary like a pandemic happens, we don't have a plan that says it's okay to behave a bit differently because we need to do this fast.

Otherwise, we're all going to go down with the ship. And I think on the topic of mental wellness, well, it's just concerning is that, it should be common sense or empirical that if you don't have any money or your job is cut off and your mortgage is at threat and you can't feed your family, that that's going to lead to significant problems.
I'm not sure why we need evidence and research to really underline that, but at least the evidence and research is coming through. So, I think where it stands in the community now and where we are right now in this point of time in the pandemic, is really on the advocacy front to make sure that the governments do go big or go home on funding this. This really needs to be knocked out in 2021. It needs to be done as quickly as possible. People need to be furloughed. They need to be forgiven. The forbearance system doesn't work when you ask people to shut down in order not to strain the hospital system and strain the health system, the government really needs to come in and help resolve this and then we may have to clean up some debt after words. But now's not the time to be arguing about that.

Saviano

There's certainly a funding role that the government has played and will continue to play to alleviate that pressure. But perhaps let's stick with the UK as an example outside of the funding support that will come from the government. What other support do you think is in the realm of government to be the principal supporter of citizens during this crisis?

Wintermeyer

Well, again, this is a very important role I believe FinTech has to play. I think everyone recognizes in the policy area, had we all spent a bit more attention to what we're trying to do in the payments network with blockchain or fintech, and have we been a bit further along with the evolution of that, we might have been able to use fintech to a much greater effect than we have been. But I would point out in the UK's case, having spent a decade promoting fintech and particularly post banking crisis and post competition mandate, which came after the banking crisis with the Cameron government, really look to the competition authority to create a rich fintech environment by promoting it as an antidote to the four large banks, the universal banks, two of whom have gone into state receivership. After a decade of that, the first funding out of the blocks in the UK excluded the fintech in the non-banking sector, which I think certainly tarnished the UK FinTech sector's crown. Luckily and stealthily, through lobby and the community voice that got extended, it included FinTechs. I think there's still a lot of work to do to include the non-banking sector in getting money quicker to people. But FinTech has a very huge role in helping people manage their money and particularly with small and medium sized enterprises to get on top of liquidity. Certainly, there are all sorts of new vehicles in place and lending vehicles that can be used to support people. We just need to basically turn it on. But you know, we need this buffer zone. We can't just operate the traditional forbearance system through a global crisis with its punitive nature and you know, expect people to cope through it. So, you know, I really do hope policymakers pay attention to this in 2021. Otherwise, we'll get to the back end of the year. And, you know, I noticed the EY chairman speaking about the recovery in the second half of 2021, Richard Quest. And I think we're all very focused on that. So, let's hope that that is the case, that we're in a position to knock all of this on its head over the next five months and set to recover from half to.

Saviano

Let's certainly hope and you made an important connection. I want to make sure that our audience picked up on this that you've extended in the short term the role of government. As you know, through financial relief and stimulus payments, and then pivoted to the role that innovation and technology can play. And from our discussions, Lawrence, are many, many great talks. I know that you have a very interesting point of view about perhaps what some may say is a bit of an unexpected source of relief in the pandemic, in this innovation and technology space, particularly around digital currencies and how a digital currency can be used to help to fix some of these problems more quickly. Talk a bit about you think the role of innovation and technology, but let's get very specific to digital currencies and how we think they can be helpful as we come out of this crisis.

Wintermeyer

We're always talking about central bank digital currencies. Again, it was our friends out there in Diem and Dante Disparte in the team that launched Diem. And I like to say that it was the stablecoin that launched a thousand CBDC projects because it certainly kicked the central banks into responding to digital currencies. And just to be clear, I think for our savvy technical listeners, most central bankers that we've spoken to over the past five or six years certainly are not interested in Bitcoin or decentralized cryptographic currencies. They most don't have a problem with it. They just don't have a use case. The FSB report quarterly on it. They recognize that it doesn't present any issues to the financial resilience of the planet. So, we want to put aside Bitcoin and cryptographically generated currencies and just talk about digital currencies. And so, I think stablecoins and let's take USDC as an example of one in the market now.

Stablecoins are so popular because central banks don't have digital currencies and why are they so popular? Well, if you've got a wallet and you're in the financial system, just like the banking system, you've got some identification you can get money right now, you can get money right now for me and get money right now from a retailer.
You can pay people right now. And that removal of friction and the ability to get money to people quickly. So yeah, if you had a government that was issuing USDC Stablecoins right now, some of the greater public and encouraging consumers to, you know, go through the appropriate onramp to make sure that they could receive that money, we could get it to them pretty darn quickly.

I think it's that simple. But that's a good model, I think, for thinking about CBDCs and where retail CBDCs are going to go, because had we had something like that, it probably would have been much more effective in getting money to people. And again, the liquidity of the situation we find ourselves in where, you know, frankly, if your rents due and somebody is going to kick you out next month, money in three months isn't really going to help you unless you've got generous friends.

Saviano

No. And so it's about it's about speed and efficiency and data privacy data security. And in many countries, I think to some extent the UK government relied on this, that if you look at the financial pipes, if you will, between citizens and government, that in many cases those pipes are for paying taxes. They typically go one way, right?

The money is coming in to government. But in many countries, they reverse those pipes. They reverse the direction of the financial flow, and they use those connections to actually push stimulus funds out. Like most would say that that's probably still not the most efficient. And as you said, that's a reason why we're seeing dozens of countries launch formal evaluation programs for central bank digital currencies, digital fiat currency. Certainly, we've talked a lot about the UK today, significant interest at the Bank of England for a digital pound, sterling also in the EU, lots of interest for a digital euro that could have a profound effect, perhaps not with this particular crisis, but we'll have future crises and it could be very, very impactful there, couldn't it, Lawrence?

Wintermeyer

I think the point that you make about, you know, reversing the tax flow is probably one of the most important items that policymakers should think about.

You know, tax is the only source of revenue Governments have, full stop. There just aren't any others. I mean, they might be licensing know schemes and regulations, but it's predominantly tax and then in most Western countries, there's a provenance around the identity of a citizen through some means, whether it's an identity number or certain certifications to identify the citizen that's paying the tax in a digital world and with a digital central bank currency, there is no reason why you should not be able to get money to people very quickly.

If you can just link those up. We've got a banking system in the West that has a high barrier of provenance, an identification called know your customer. So we need to get the banking system engaged in that. We have most of the other Western government agencies that issue you, your driving license, your passport or all sorts of other means. So, the statistical probability of identifying that a citizen is a citizen with any of these means that are in place right now is pretty straightforward. But you know, no one's been able to pull this together. So this is, you know, you start solving some of these issues around entity, and you certainly make things easier for the government to pay people.

But I think, you know, coming back to the point of tax, I know that you and I speak about a lot of people start to, you know, turn off in the context of digital currency and say, my goodness, why they're talking about tax? Well, you know, from a government's perspective, if it is their only means of raising revenue, the idea of a digital currency both in the retail markets or for businesses even moving to wholesale CBDCs for settlement solve a lot of problems in terms of governments being able to get their own money quickly, which I think is important for most governments that are running debt, you know, to GDP ratios of, you know, getting close to one. I think the U.S. debt is probably a debt to GDP's, probably 100% UK is kicking at 85%.

This is a pretty meaningful area of discussion.

Saviano

It's a question of I think you hit it on the head, it's a question of disability. And transparency. You can't, if a government official you can't tax what you don't know is happening.
So how do you allow government to have full transparent view of those transactions? So, if you're an honest taxpayer, you don't care if the taxes are collected more efficiently? Right. And so I think that's an important aspect of this as is something that you hit on in our earlier discussion around the ecosystem. And if you look where we are today, you know, sitting here early in 2021 and what has to happen in this vibrant financial services ecosystem as we emerge from the pandemic work on and make progress with issues as an example you mentioned around digital identity. Who are the important actors in that play to promote substantial impact and what are some of the immediate steps that you think we should take in order to bring those actors together to solve these big issues?

Wintermeyer

I believe that the banking system and the banks have a role to play on this. And I think you raise a very good point, Jeff, particularly about taxes and citizens and in any standard distribution of a population, most people aren't committing crimes, aren't hacking systems, aren't stealing money, aren't cheating on their taxes, aren't avoiding the system. Most people in society are good citizens, but most people in society pay for the bad actors through the barriers of identity provenance, by having to know your customer exercises with banks or any of the authorities you deal with to prove who you are. And I think there needs to be a recognition in the system that financial crime when you look at the numbers, looks as if it has gone on unabated for many years, even though we have these systems in place.

But generally, most of us in the public seem to pay for that. And I think that's important because similar to, you know, 2008, I think particularly what Americans and Brits found was that the taxpayer is the largest lender of resort. You know, it wasn't the government, but the government's bank of the bank. It was actually the taxpayer, you know, from a technical perspective. And so, you know, getting back to this issue with COVID and, you know, funding the idea, I think that most taxpayers are sitting back and saying right now is, ‘come on governments just, you know, connect the dots here. We're ultimately the ones that are paying the load. How difficult, how difficult can it be to connect up these dots?’. So, I think the banks the banks have a great role to play in that, but as do the technology company. And, you know, if you can get the technology companies together with the banks and together with the governments, which is what we try to do at GDF, and you can get something meaningful up and running, then then I think you're a long way to solving things. And, you know, Christi and Carlo in the US on digital dollar always talks about us and how all of the best strides are made when it is a private public partnership and the government is working with private industry and mobilizing the infrastructure that private industry has.

Saviano

I love that. I love how you said it and I totally agree that public private partnerships will be such an important tool over the next 12 to 18 months in particular as we emerge.
Let's extend that sort Lawrence of you know, we had a great discussion about what has to happen at an ecosystem level and government perhaps as the lead actor in that play in the role of government but let's come down to you. You said it just a minute ago about the individual taxpayers and some thinking about our audience, our great better innovation audience and the role, of course, individual taxpayers.

But they represent in some cases private sector, multinational enterprises. What's the role and what can somebody in our audience do today? Let's say that they're an executive that in the private sector, at a multinational enterprise or that could be within government or an NGO but what are some of the specific things that somebody can take away from this conversation about how do they get started with the benefits from some of the digital finance solutions that are in the world today? So, they love your ideas and now they're thinking about their jobs and what they can do to help their institutions, but they may be overwhelmed. How do you get started?

Wintermeyer

Well, I think that's a great question, Jeff. I don't think anyone's actually ever asked me this question. If you were in financial first.

Saviano

I can't believe it. I'm so excited about that.

Wintermeyer

It is. I've had great questions all day. It must be international great question day. If you are a financial services professional and in any aspect of financial services and you're in any aspect of crypto or digital assets, just drop me a note. GDF is a community where as long as you're in that community, you can become an individual member at no cost. And participate on working groups that are trying to solve this sort of stuff. And so, Jeff, I would say this. If you're keen on tax, you can join our world class tax working group led by.

Saviano

Who doesn't love tax?

Wintermeyer

Well. Well, exactly.

Saviano

Everybody loves tax.

Wintermeyer

And you know crystal gone and where there's a wonderful George somewhere but you know, with community pals like the OECD who are leading this face and a number of the tax authorities, we're trying to solve these things. But in all seriousness, we do so much in our community not just from stablecoins CBDCs interoperability but as you know draft sustainable and ESG is a really big this year. So the role of crypto in digital has to play particularly in sustainable finance and things we've been lobbying through the UK FinTech Review just in the UK we’re global.

But in the UK we've been doing quite a bit on this area of sustainable and how it comes together with digital assets. So, I think, you know, one, find a community and find a community of people who are doing things. And I think GDS real marker as, as told to us by, you know, our members and the policymakers that spend time with us is execution.
We do things, we are delivering conduct standards, you know, white papers, we're moving the dial. So that's a great place to start. But communities you know, Jeff, you and I belong to so many different brain trust that are actually executing. I think, you know, we need to compose the directory of great international brain trusts and not for profits so that we can extend the brain trust and get listeners involved in things because there are a lot of very good things going on in what I would call not for profit foundation that help this industry government collaboration.

Saviano

That's such great advice. And I've asked that question before to others to really try to hone in on empathetically. How do you help those? And I mean, we do this for our listening audience. How do you help our audience if they're wrestling with these questions? And I love how you phrased that. It is about communities, you offer, come in as an individual member too GDF I think that's wonderful. You know, even as a starting point, go to the GDF, say there are so many great leading thought leadership and reports to immerse yourself into the great work, I think is a way to get started. In the recent piece, quite thrilled to help and to contribute to that. You published sort of a year in review, right?

Over the past month or so I thought it was wonderful. And that's a great place to go. So you can find great information there. But the point about communities and find what's most interesting to you and I think that is a 2021 phenomenon there are many communities that have already formed where there are like minded individuals thinking about these issues that are relevant no matter what the topic is. And with the benefits of the Internet, it doesn't take many searches to find what those organizations are. Okay. Lawrence, we're coming towards the close of our time together today and it has been such a tough 2020 on many, many people. Tell me something that you're really excited about. I want to end this on a positive note.
What gets you going Lawrence? What are you optimistic and excited about as we are still in these early days of 2021.

Wintermeyer

I'm always excited about young people who are really taking advantage of all of the knowledge that previous generations have generated and are crafting it into their own view of how the world works. I mean we were talking about credits on the Young Three to, you know, as a campaigning environmentalist I have a ten year old daughter who is so focused on plastic in the ocean and things about the environment. She comes home and tells me, having grown up in a community that was very focused on the environment and in a family that I feel blessed where fit has certainly throughout our whole life, you know, tried to be conscious of our relationship with the environment. But I really do think that young people are our best antidote when it comes to the free world, when it comes to the model of democratic capitalism that you and I speak about, Jeff, because there are things in the world that need to be improved, our political systems are creaking right now.

Gini scores around the world reflect that, Wealthier people have just accrued at a much faster rate, and particularly asset owners than average folks who've been stuck in deflation. And so I really do believe young people have a voice and have the tools to engage both in the business and the political system and change that and again, I think because in our watch, Jeff, over the past decade, you know, innovation theater and what we've created in these global innovation hubs and global collaboration networks, we've offered people the tools and at least certainly said version one of the roadmap for how to come together and how to not just think about and talk about stuff, but how to do stuff. I really am most excited about that because, you know, quite often I get accused of being a bit depressing when I'm talking about rational economic forecasts, but I'm not sure that they're going to be a huge number of people and you know, of our vintage that are solving things. There are a few of us, but you know, I think we need some fresh boots on the ground from the younger generation.

Saviano

It is a wonderful voice of optimism. I would totally agree. As a parent of three early 20 somethings in our household that just continue to be amazed by what that generation can do. And I think that is a wonderful way as we come to a close in to our final section. Lawrence, you have successfully made it close to the end.
We're not done yet, Lawrence, but very close to the end of our great discussion today. We end the Better Innovation episodes with rapid fire questions, fast questions, fast answers. What do you say, you up for it?

Wintermeyer

I'm up for it. Jeff, go.

Saviano

All right. Now, we gave you these questions in advance, so I know you're thinking about these and.

Okay, first question, what book do you have on your nightstand? That I'll bet. Can I just say I'll bet? And we had this great in our one of our prep calls that we had. You brought out your puppy. You've got a Maltese. And we also have a Maltese. Mine is crazy and cannot be trained, but perhaps you have a dog training book on your nightstands.

Is that possible?

Wintermeyer

Oddly enough, no. I've had dogs, so I'm okay at training. But the Internet, you know what to do. The Internet's great for training. That's true. We're actually in a dog school class, but one of the benefits of COVID is that I'm at home and home office all day. Best way to train the dog. The dog's been potty trained in under three weeks.

It's extraordinary.

Saviano

The advice you get on better innovation is like no other.

Wintermeyer

Yep. No dog books, but here we go. I got three books on my desk rather than on my bed nightstand. Mariana Mazzucato - the value of everything, making sense of what's really going on in global economics. From the Four Horsemen of the Apocalypse, which is one of my favorite post-financial crisis films. And from my partner, it's the Survival Manual of the Four Horsemen and understanding how the world really works, which is a lovely little hack and Jeff this one, a man after my own heart for asking this question standards and there are stories like, you know, because I run a not for profit that's focused on standards, I'm really keen on the history of all standards, how standards are put together.

It's got to be the most boring topic in the world. But as you know, it's the most important thing for driving adoption. There you go. You couldn't find a more boring reading list on anyone's desk.

Saviano

Boring? That's amazing! Hey, listen, I don't think so. And I get my great reading suggestions. We're launching, we talked about we're launching a standards initiative out of our lab and some of our work.

And so that's great. I'm going right to my favorite online bookseller right from here. Okay. You're doing great, Lawrence. That's the first and number to tell us about a historical figure that you admire.

Wintermeyer

I love Winston Churchill for reasons I think other people probably don't. Mainly, and that is a young man from a privileged family. He wasn't given any free passes. His father was very unpopular in parliament. He went out looking for adventure in South Africa and fighting The Boer War, was captured. He probably messed up most things early in his life, including the Admiralty in the First World War and Gallipoli. And by the time the hour came and he was the premier of the UK, he really had the ability to lead and lead in an extraordinary way and come with a man, come with the hour, I think is probably a term you would use for Winston Churchill on the eve of the Second World War.

Saviano

Oh, that is wonderful and that is a great story and I completely agree and I'm so glad we added this question this year. And we've had some we've had some wonderful, wonderful responses. Okay, here we go.

Last one. Lawrence, what do you see is our greatest opportunity to build back stronger when we finally emerge from this crisis?

Wintermeyer

We need to rebalance our view of social democracy. And fix capitalism. And we need to do that through involving capital, private capital and foundations and working with government, asking government to solve things on their own and creating an expectation in society that governments are going to solve things is just not going to work.

The money is in the private markets, and the money will help us solve social problems and make society better.

Saviano

We are very aligned on that. And with that great discussions about it, these are big societal problems. And you need financing. You need a solution providers and you need the recipients, those who hold the keys to the kingdom of the actual problems.

You need that collaboration, and it's going to be an important year for that.

Wintermeyer

Absolutely.

Saviano

Lawrence, I've really enjoyed this, yes.

Wintermeyer

I have as well. Jeff. I just wanted to point out you didn't send me the three questions in advance, so I'm not going to have our listeners think that I had time to plan for that.

Saviano

Oh! I didn't. oh, I'm sorry. Okay. I had to answer those just off the cuff today. So that's pretty good. That's pretty good. You know, I think I'm not going to send it to people because you did so well. I think it would be an unfair advantage.

Wintermeyer

Tickets to the mystery Rapid Fire, right?

Saviano

Yeah, I like that. I think that's a really good suggestion.

This has been wonderful. I knew it would be. I can't wait for you to come back someday and you'll come back to better innovation as a guest.

Wintermeyer

Love to. Thank you very much for having me. I can't wait.

Saviano

This year we're going to see each other live this year sometime. Lawrence. I'm not quite sure when it would be, but maybe after the summer. I wish you and your family well and thank you for spending time with our better innovation audience. You are a leader in this industry and what I love about your work is that you are doing it for all the right reasons and you're making a real difference. So, on behalf of the community, I want to thank you for your contribution.

Wintermeyer

You're very kind and thank you very much for even promoting GDF and what we've discussed. We're a very small Not-For-Profit but we do believe that we're doing very meaningful stuff that. Thank you very much, Jeff. Thank you.

Saviano

This has been better innovation from EY. Let us know what you think about this show. By leaving a review or by reaching out to Jeff at Jeffrey.Saviano@ey.com or find him on Twitter at Jeffrey Saviano. Better Innovation is produced by the great team at Hogarth Worldwide.