Making Europe Fit for the Blockchain, DLT & Crypto Era

[Music] i'm very lucky to be joined by a number of great experts to help me deal with that big and relatively challenging subject um but just before we get to that i thought i'd do a quick round of introductions so again my name is adam gagan i had government affairs for american express for europe middle east and africa um i therefore spend most of my time at least pre-covered on a plane uh speaking to policymakers on how to regulate these different spaces obviously blockchain is increasingly becoming one of the main areas of debate so i'm excited to try and drive a fun and informal and relaxed discussion today and as i mentioned i'm pretty lucky to be joined by some experts to help me do that um i'm lucky for two reasons one they are the real experts and again probably as i go through them you're all gonna already gonna recognize a number of their names and the things that they do in the space secondly again we're having a european discussion uh i'm very lucky to be joined by sort of a representative from each different element of europe uh when it comes to policy making uh we've got a great representative from a member state obviously a great representative from the european commission from the european parliament and let's say a civil society and that very nice nebulous term uh as well so to go through them each uh we have dr cookies the state secretary for finance for germany uh who again many of you will know as a key driver of policy and financial services and more broadly you know innovation and digitalization across the eu so welcome dr cookies thank you for finding time for us uh we also have eva khali who again many of you will already be familiar with activity in this blockchain space who's an mep who is uh always able to give her forthright views on how europe maybe needs to move a bit faster and be better certainly around blockchain and future technologies from either her positions formerly a shadow rapper tour or chair of different committees and panels uh or as her role in the blockchain council uh and so welcome uh ever and i know eva you have just had a baby and uh just managing things at home so i think you'll join us with video in a few minutes but thank you again for finding time uh the third person i wanted to introduce was jan citizens who again many of you probably will recognize the name of as sort of the man with a plan when it comes to blockchain and digital finance at the european commission who again is head of unit for digital finance in dg fisma and again he's able to bring not just a wealth of technical expertise on how to write the correct rules for europe but also has a good political visibility given his previous experience and a couple of very high profile cabinets at the european level as well with both barney and then tom droskis so welcome yan thank you again for finding time uh and then lastly uh but certainly not least there's uh agatha ferreira who is again a member of the expert panel of the eu blockchain observatory and forum also a participant in blockchain for europe and essentially one of the key experts trying to understand how industry private actors and frankly the whole european ecosystem is to take on blockchain so welcome again agatha and thank you for joining us today so that was quite a big round of introductions um thanks guys for finding time as i said we're going to try and keep this relatively informal and essentially there's two things i wanted to flag before we get into the detail first we have quite a broad title here so you know i'm making europe fit for dlt and blockchain so we are going to again invite your views on more broadly how europe needs to tackle the space but because a lot of your expertise is in financial services and that's one of the areas that's potentially most disrupted almost challenged by this new technology we'll also focus a little bit specifically on the impact there secondly i mean there's been some great discussions the last couple of days and frankly more broadly around europe on regulation on policy on more broad technical concepts given your expertise what we're going to try and focus on today is really the political and policy challenges that we see coming into this blockchain space for europe and again just trying to get a debate going on are we moving in the right direction so let's get straight into it i have three big questions for you we'll tackle first you know what are the big risks and opportunities you see for europe in this space second are we taking the right approach in europe so far and then third we'll try and end with sort of a quick fire round in terms of you know what do we need to do next what should the priority be so without further ado let's get straight into it and potentially your i can come to you first and ask you again from your perspective uh the high political level and again for one of europe's largest member states all of the big risks and opportunities that you see for dlt tech in europe and again specifically for financial services yes thank you so um i think the the obvious um starting point is the increased digitization that we've all seen massively accelerate in the course of last year business models being revised business models probably being taken um you know along the digitization trajectory um acceleration path by three to four years just within the last year relative to normal just because behavioral um changes have happened um that are very obvious um and uh that has been applicable i think both to the real economy and the financial sector so we've seen this pretty um pretty coherently um spreading and of course that gives an opportunity for new technologies particularly dlt um and presents an opportunity to to reduce transaction costs so i think that's a large part of the um the benefits to scale um and um and that also applies in our view both to the financial world and the um producing real economy world so in that sense i think that's uh that's also an economy-wide phenomenon that that we can see and the use cases are massive and broad whether it's payments issuance ownership transfer financial instruments clearing settlement um i mean it's uh it's uh it's really the financial sector that has a lot of dlt applications on the other side um of course the the financial sector is both stakeholder and enabler for the real economy so in that sense the the um this sort of um the sort of uh mutually effective other aspect is is very strong and we've really seen that come to the forefront when we set up between the our central bank the bundesbank the finance ministry the financial industry and some of our um producing um technology companies um of our of our um large industrials um and uh sap and siemens and bosch and all of the big names that you have in german industry um on a project on programmable money um and programmable payments to see you know like what's real in this and how are do the use cases look and and fact of the matter is um all of these massive industrialized industrial global leaders were extremely engaged in this topic of programmable money programmable payments um to basically take the next step in in terms of not only are we going in the direction of digital currencies we also want smart digital currencies right so in that sense i think it's it's also quite interesting to to see all of these massive industrial companies talk about machine to machine payments and what it means for their um future growth model and how real this is in their in their planning um fully automated settlement between devices and payments um in the internet of things pay-per-use payments i mean it has it it has some real um it has some some real effect and so i think it's uh it's extremely important how we navigate this transition um um to the digital economy how we make use of this uh of this uh smart money programmable money um above and beyond that of course um it's very important and that's one of our key elements and that's why it's i think this group is going to be interesting because um legal certainty um public support for sort of the public good aspect of this of these projects um um to uh to sort of try to internalize the positive externalities um and uh of course on the other side also take into account the required uh consumer and investor protection i think all of those things um all of things those things are important and then above everything of course is the whole question of monetary sovereignty right because at the end of the day that that's also one of the elements uh that's key and then on the national level some of the other things that we're really working hard on um is on the one side our for the future fund where we want to invest 10 billion of public um money through kfw capital through um the high-tech grunder force through the the um all of the um eib um and their subsidiary um [Music] venture and elements so in that sense we really want to put a lot of public money to use there and of course it's all about bringing forward stuff like our blockchain strategy um we um are very active in this and um and are promoting for example um a complete tokenization um and d dltization of our uh fixed income markets and we want to really bring everything from the issuance to the trading to the custody to the settlements um of the fixed income value chain onto uh the blockchain dlt um on the other side we've passed some legislation on crypto custody business which is um also something that i think is quite interesting for this group because it basically means that we have a um legislative act that specifies under which terms and which supervision which uh licensing procedures you can offer um a crypto custody business and then also get sort of the stamp of approval of having a authorized and supervised uh proper um legal framework for it and we've seen quite a lot of inflow of license applications for that and so in that sense um i think it's uh it's going in the right direction of course everything we do and that is an elegant transition to yan um everything we do at the national level we're sort of um hard coding in a way that it'll be compatible with everything that we're discussing at the moment with mika and dora and all of the um all of those things because of course it's very clear to us that this this will never work if we have 27 isolated member state solutions we really need all of these um issues to be moved to the eu level and we're happy to give up um all of the things that we're developing nationally if we can find all solutions to this at the european level that makes sense and certainly as always uh germany being a very good european citizen i think showing leadership particularly with the kind of investments of 10 billion that you talked about is going to at least drive some innovation i'm sure people listening to this are going to be excited to see how they can participate uh always get a bit of public money right to invent something new is a good approach for europe so that'll be good to see and just to pick up on one comment you made i think a lot of what you talked about is quite exciting uh there's clear benefits right for society for financial service stability coming from tlt being applied one thing you mentioned sounded quite like a big risk though which was around sort of financial disintermediation almost of monetary policy and sort of what again central banks do is that a real risk that you see kind of on the horizon um is that something that again we need to be looking at when we next move to yan and eva in terms of the the kind of work that's going on in my car and other areas well i'd um i'd go the other direction i'd say we need micah to avoid regulatory arbitrage right so i think uh it's very important that we have these these these um pieces of legislation at the european level to prevent um the libras or dms of this world to engage in regulatory arbitrage i think that's very that's why it's very important to establish this firm rule set and to make sure that uh that we um that we have a have you know a firm set of protection measures for consumers who um who invest in digital currencies stable coins etc and so in that sense i think it's it's extremely important to have a good and established supervisory regime that it's clear what how collateral is defined it's clear how access to collateral is defined it's clear in which currencies the um the um instruments are denominated it's very clear that if there's currency risk it's transparent and all of these very crucial i mean those are all sort of the basics of course it gets much more complicated and but i'll leave that to you then to to um explain the the nitty gritty of nika perfect thanks dr cookies and as you said great segue over to you yan and again i think we'll maybe talk to you in more detail sort of where we are with mike and what's coming next later but just in terms of again picking up on that that kind of framework that dr cookie's laid out of big risks and opportunities is that also the kind of thinking you've gone through when you approach mika or more generally that sort of commission strategy to this big space and no absolutely so if you wanted to try to get some divergences here now so far i only would see actually similarities unfortunately or let's say fortunately for us unfortunately maybe for the interestingness of the panel i think uh i can really uh seamlessly uh follow on to this we are looking at blockchain you can get very excited about blockchain and the changes it brings we look at this in the end at will this also what what is the added value it has in the end for european citizens and for european businesses and we are i think we are trying to also uh support this development from various parts regulatory financial uh supervisors because we do think that there is something in really for uh for for citizens and uh and businesses i think uh cookies has mentioned a couple of points indeed from the from the from the german perspective uh uh on the indeed the payment aspect on uh more the interaction with industry which i think is a very important uh area where europe of course is quite strong whether it's uh more broader manufacturing it's consumer goods etc and there i think the possible let's say uh functionalities blockchain functionalities payment functionalities and others can can i think uh create really added value also for for better products for our consumers i think another point which we're hearing actually a lot also from from smaller member states because you know that europe is actually quite diverse and it's really interesting when we actually made these proposals we really had a broad outreach we had events for the stakeholders in all the member states and it's really interesting to see how diverse let's say the the expectations are but there are actually high expectations everywhere and and so in other member states we hear very strongly this this uh this hope that actually the in the area of capital markets funding for companies for smaller companies especially that they can be in a lot because this can be much more efficient and you know that that a lot of new member states don't have very developed capital markets actually and so there's really the hope there uh which is i think the second example of the of the added value here that uh based on dlt actually you can you can construct a lot and that's what i think we're trying to promote indeed with the dlt uh pilot which is one of our proposals as well which looks at indeed those those dlt crypt based assets which are within the existing regulatory framework and really trying to enable funds actually to to to experiment um and that's something which we're also trying to then back up actually in the context of our broader strategy with the idea the possibility of doing cross-border testing actually so actually right now uh the european supervisory uh authorities uh they have an innovative innovation forum and they're trying to develop a framework actually on on on how actually then this kind of testing which we need all actually can be implemented not only in individual member states but actually also across across borders and that's i i think i would add one of the big uh the big opportunities which europe also has in this area that we actually look at this together uh that that we try to have a common framework that we try indeed to complement the funding which we have at national level with the funding at the european level the the the initiatives we have the very good regulatory uh let's say frameworks which are already in place at the national level and i think your cookies mentioned the number of them from germany that we complement this indeed with the european framework which which actually sets the same rules for everybody not necessarily at a very low level to attract people because we find that what the main people think people are looking at is actually uh thereafter is legal certainty actually so it's not necessarily a low level of regulation and by creating this legal certainty not only for one member state and actually for all 27 member states and the possibility that you register in one member state and then you can market your product actually across all the 27 member states that's really one of the uh the key objectives of mika and actually of our whole digital finance approach there are risks and those have been mentioned and that is why precisely we need those rules that is precisely why we cannot say well this is a perfect space it's unregulated let's keep it there it is it is uh it has great opportunities but it is still finance and finance is a risky business that's that's why we are regulating it and and so we need indeed a regulation which actually regulates this innovation in not out so that we actually frame it properly uh that we have a proportional framework actually lighter rules for smaller projects and more strict rules indeed for larger ones it's definitely when they come into the area where they could actually have monetary policy implications as well mentioned before those are the rules i think we need and i hope you're on a good way on the regulatory side and then it's of course very important for us actually also to to implement that and we know regulation is is important in finance but it is only one of the elements funding is another important one it's not mentioned the openness of the supervisors really to test and to innovate go along with innovation is another very important element and we are working on that with with the european supervisors i mentioned that and talent is of course a last but not least important elements so we're really trying together with the various directors general and the commission actually to work on all those uh points that sounds exciting again as you say let's get the rules right let's try and make sure there's some money so people can do something a bit more interesting and then like you said it's going to be talent and getting the real people to actually build this stuff and make it work for european citizens it's going to be the last mile so that that sounds quite exciting and certainly your point on harmonized rules i think it's something a lot of people would welcome i mean we as amex we work very much across border right over a large portion of europe even you know when we're quite a large organization we find that still very painful today in these new technology spaces i think it's ever more needed to have at least the same consistent rules either for dr cookie's point of view so there's no regulatory arbitrage or frankly just my business point of view right so you can produce something cool and interesting and get it out there as fast as you can and have the scale across europe so that that's that's exciting and maybe then just building on what you were saying in terms of what real people want ever if you can hear us could you comment on sort of again what you see as a sort of big risks and opportunities what again the kind of voters citizens that you represent uh talk about and particularly just picking up of a question that's come in you know is there a breakthrough that you expect to come either for good or bad do you think we really again need to have front of mind as we approach this space so again welcome ava and congratulations on the on your new baby thank you so much congratulations to you too so i heard the good news from from you anders and your wife um so i understand how challenging it is to combine everything especially when you're teleworking because you cannot exactly separate your private life from your work and sometimes this is happening also to me so at this point i'm working though on glt and mega and we have this uh digital finance package that has been uh quite exciting we have been waiting for it the last few years we have been calling for it and i'm very happy that the commission has decided to move uh forward because if you remember like four or five years ago when we initiated the first report on blockchain technologies it was actually the first it was very positive for innovation and we had to um to approach all the meps explain the technology because a lot of misunderstandings uh were taking place at that point um and and now we have a new mandate a new colleague so we have again to make sure that we understand very well the technology before we legislate but in the meantime since that first resolution we now have a lot of initiatives so it was the european blockchain observatory and forum taking place and ebsi we have in atpa and of course as i mentioned now the legislation to make sure it will bring legal certainty and will allow innovation to happen in in europe because i would say we are a bit delayed in comparison to other countries because uh maybe we were asked to start to launch pilots and to uh have investments on blockchain to test it but in the end because we have a fragmented market also we're trying to remove all the barriers to achieve a digital single market um this is not um completed yet so what we expect is to have a regulatory sandbox uh um offering settlement services as you know for transferable securities for dlc and i see the big opportunity here is to attract all the players that they feel there is no legal certainty yet and make sure they will they will come here and they will not live in five years which is the um the time frame that was uh offered by the commission but that it will become a permanent structure we will test it for two years and then for another three years and in the end they will feel that they can um actually innovate in a safe environment so this is a challenge and has of course multiple factors as we have to harmonize different uh member states and approaches and um the good and the bad thing is the bad thing is that some member states already developed their own strategies the good thing is not everybody has so now we're gonna have a european approach uh which hopefully will um will allow us to talk about a european market and um i i haven't heard all of your interventions because i was trying to to come back to my video here but um i don't know if you already mentioned uh while we're talking about blockchain dlt and cryptocurrencies everybody is in the next big hype on blockchain which is the nfts and how much you can succeed there and more challenges are uh you know are coming up and we have to deal with and still we have not decided in europe if we're gonna include the defy um decentralized finance you know why because we have i would say actually the biggest challenge to start with is the definitions that we have to agree on what is the fi who should be categorized there how many boxes should we have the old boxes or should we create new boxes um to include these amazing innovative ideas my approach will be of course to create uh more new boxes and make sure that we will have an open environment to innovation we will be tech neutral and uh we will manage to um to increase the threshold to make it more easy to include more of the newcomers i have the feeling that we will have to fight again with the barriers of the traditional players trying to control even these innovative solutions by by giving them definitions that would fit them in those boxes so i would say this is the number one challenge and the number two is to make sure we will agree that this will not just be a pilot regime but it's gonna be the testing period to create you know a regime that's going to be implemented at the european level and thirdly of course to invest properly and make sure we will grasp this opportunity and and find how we can we can support innovative ideas and um and allow them to have access to to more data if they need into more services if they need and make sure that we will open up the old traditional players to to what's unstoppable and this is innovation so i will stop here and i can be of course more technically specific uh that's my next intervention thank you that's that's perfect thanks and i think i particularly just since we saw some questions coming in while you're speaking that idea of again being a little bit more innovative trying to bring things give certainty but again get things in place already so people can start producing things in europe uh i think that's something that certainly a lot of the private businesses probably listening to this are going to be excited about so thanks for those there's good some reason maybe i'll and i'll come to you agate i mean you've heard now from leading member state from the commission the parliament what they see as the big risks and opportunities quite a lot around process quite a lot around trying to make sure europe has a level playing field moves quickly but in the right way you know when you speak to the people within the forum or within other contacts you have with civil society ngos private sector entities you know what do they talk about when they talk about the risks and opportunities of this this big new dlt space well thank you very much i think that a lot has been said and there is not that much for me to add but i should probably complement what has been said before and uh you know when when you talk with uh with the industry with with the stakeholders they talk more about opportunities and risks certainly because this technology is an amazing opportunity the token economy enables is an amazing opportunity and certainly as dr cookie has mentioned the economies get going digital and dr cookies was saying about this elegant navigation towards digital economy but i would say that the uh i would complement that with saying that it should be the approach should be how can we lead that digital uh transformation uh how can we be the leaders in in on a global kind of uh in the global scope so this was this would be certainly kind of my uh my recommendation and also there was something mentioned about uh why we need mika and we need mika to prevent libras and dms of this world but i should i would compliment that that we need also mika to enable diversity of our dltx ecosystem to enable and support these innovative ideas as eva said and to enable this organic growth of different new business models that the token economy enables so as cm has rightly said there are there's there are high expectations especially among smaller member states which perhaps are not as developed as those established more established economies and this is great opportunities for them and we should certainly not miss that and this is an opportunity for those smaller states but also for europe for economic growth for development and and the risk here is that uh the biggest risk i think is if we do not take this opportunity and make the most of it so that would be that will be my summary of of this particular question it sounds like it's better to do something to do nothing uh which again i think makes sense um just maybe now we'll move to a bit more of an informal discussion right sort of a quick fire around but just to get you guys sort of uh maybe challenging each other and looking for the way forward i mean i think that you've really set the scene well in terms of the big picture i think the question that seems to come up is is europe taking the right approach though given again what we're seeing are the jurisdictions around the world do and also the fact that this is such a fast-moving space you know it's still quite early and we don't really know what's needed necessarily right either from regulation interventions or other things so maybe jan i mean again as the commission is driving a lot of this with the mika proposal more broadly i assume you think that is the right approach obviously um but in terms of the direction of it you know it's quite broad it's capturing a lot of dlt uh terms with very broad definitions that capture other things that are even non-dlt based you know um is that exactly needed right now uh do you think it'll be enough do you think it'll be future proof what have you thought about when you've been bringing this proposal to the fore and again how do you think it's going to help us in europe succeed and benefit from this new technology we thought about it a lot when we developed it i hope that we have found good solutions we have now definitely uh if uh and i think york's team looking at the proposals very closely actually so uh hopefully they will get even better and i'm confident that that's the case um i i mean just a couple of points uh on this we have from our side we have suggested indeed a comprehensive framework uh for crypto assets we know that this is not the approach which other jurisdictions are taking uh we are more actually applying all the existing laws and uh do that a bit one by one i think we have the impression from from both from the discussion with the industry that that this is in the end the preferable approach to have something which is a bit all-encompassing and then maybe within the regulation actually distinguishes different cases we also think that in terms of kind of not creating loopholes so from the supervisory perspective that's the the better approach um i think what we've been worried about a bit is to define in too much detail uh various detailed kind of categories of assets and whether they are covered or not and let's say what are the we try to keep it really high level the general crypto assets you have then you have indeed those tokens which are referencing specific assets assets either in general or particular single currencies and they of course have a particular focus but if we started now to look at detailed rules on on vouchers on uh defy on uh possibly true defy not through d5 or other things i mean we would probably kept recapturing the situation today but i don't know how the situation will look like in three or four years and it is very likely that we would not capture it so i think uh our approach here is uh to have to have an established principle based framework i also want to really highlight that when it comes to many of the details we are leaving and we're giving supervisors the tools but we're leaving them actually flexibility or this question actually to apply them as they make sense because again we don't want to hardwire in law of things which may not make sense as the technology develops in in three or four years i think that's our that's our pitch and and our our proposal and uh i i hope that is going in the right direction what are the risks that's what you can ask well of course the risk is that we're getting it wrong now that's why i think we're trying to get it to avoid having too much detail uh i think the risk is that we're doing over overreach basically that we're regulating too much we're trying to address that there can also be a risk that we are underreaching because because one thing uh you shouldn't forget indeed the moment you have a european rule you may not like the european rule but at least it's one rule and it opens you the door to 27 member states the moment you're exempted from the european rules then that doesn't mean that there's no regulation then it means that the member states regulate and uh well maybe today there's no rules tomorrow there will be the first member states regulating and then the day after the next one and probably within three four years you'll be subject not just to one set of rules but four or five in that sense i think we we need to find the balance both not to regulate too much but also not to regulate too little and therefore kind of opening again a patchwork of national rules that sounds like a good challenge the goldilocks challenge right just to get it right um and i think it's a nice uh thing to remind people all those people asking for exemptions for this on that from my car careful what you wish for because like you say maybe uh you won't have one set of rules you'll have 27 to manage that that's really helpful and maybe just picking up on that and that was very clear description with ava i mean obviously the parliament is starting to look at this now um i'd be interested to know sort of more broadly do you think this approach of again taking this broad capsule approach makes sense and also you know how do you approach this as an mep given i assume a lot of your stakeholders particularly you know real people out there real families it's such a technical area something that's so removed from their day-to-day life suddenly pressures right that they face during kovid how do you try and make sure you're representing real europeans voices i guess as part of this very technical very future facing debate sorry well actually this is the philosophy of blockchain that we all got excited with and coming from a country where we um we were looking for new solutions into problems that were systemic i would say that we saw the amazing benefits of having technology that would allow you not only to decentralize finance but also to give control back to the citizens and make sure you will remove uh this incredible transaction fees and you will manage to remove the barriers for cross-border transactions you will have a trusted environment uh for these exchanges to take place because when i went back you know when i was in greece and i was trying to think what was the main problem besides the the economic crisis the economic crisis followed a crisis of trust and this was like the the the feeling that the system was not protecting us enough and that it had you know um um it was like kind of a failure that came to us as a domino effect and we felt that we were not protected as we thought and i remind you also that in cyprus some uh the banks closed for the weekend and on monday you lost all your savings and there was like no european guarantee and the state couldn't provide you any guarantees for your uh for your money and uh this means this meant that people were actually um lost their hope and they lost their savings too so when then did we introduce this this idea of having a decentralized system where you would have control of your assets and there would be no central authority that could remove them from you and you lose suddenly everything this was like really exciting as a philosophy so when i started dealing with this technology i saw the potential it had the risks it had of course but then i faced the real risks in the real economy already from the central banks so yes everything has a risk so we had to make sure that we will use it in a way that it would create let's say more options for citizens and maybe more solutions and i wouldn't say it's super technical because i don't need to go into you know the big depth of like trying to understand everything of the technology i have to make sure i understand um if what i'm calling for or if um what they're telling me is not possible if it is possible and if what we would like to do the the principle uh based approach uh would be very useful and then by design of the blockchain system and the architecture of it it would be safe and trusted for investors for users and and also it wouldn't you know disrupt negatively our financial system so i i think i read a lot it took me like a couple of years until i um understand how much we can succeed and still as you very well said this is a technology that develops and i i talked about the nfts and if these non-fungible tokens it existed but now we realize how many things you can do if you build on on a platform on the marketplace where you can auction um anything when you can trade anything um when you can have your ip rights registered and you can be rewarded for everybody or anybody that would use your content and these are things that we we didn't know they were possible so i think it's um once you understand the technology you don't have to become a computer scientist to regulate it right you just have to make sure you will not um create frictions for uh for the innovators and the smart people who developed it and you will also try to make sure that it will have this buffer where the traditional players will adjust and they will embrace um innovation and this amazing technology and that's why i see the central banks already also they were very hesitant to um to use cryptocurrencies now they are considering issuing their own cryptocurrencies because they see the potential they have even internally just from the use of this technology well that's not exciting i particularly like the way you described again the fact that there's risk for everything even leaving your money in your bank right as we've experienced in europe even over the last 10 15 years um so yeah there will hopefully be some opportunities from these things which offset those risks maybe that's a good segue back to doctor cookies um i'd be interested given again germany's kind of some center driving force within europe for the direction of travel on a lot of these issues do you think we're getting the bounce right between again this move to regulate versus this move to innovate um i'd just be interested to know if you think that at the end of the day you know the governments themselves are going to embrace this technology and actually be fast adopters or again if you're going to kind of more lean on just trying to control what the private sector does um so again kind of a big question there but just is the direction right in terms of those two big areas yeah well i think it's it's a it's a constant uh sort of um equilibrium that we have to find um on the one side of course fostering innovation on the one side but of course uh taking into account um issues like financial stability like consumer protection and i think as long as we find the right balance and strike the right mixture of uh positive effects um that one has for the other then then i think it's all good and going in the right direction but of course we all know that there are also risks in this game so in that sense uh we we want to we want to make sure that we use a lot of public funds to promote innovation but at the same time also set up rules that make sure it's done in a safe and sound way so i think that's the that's the equilibrium that we're trying to find um of course the um speed with which digitization and innovation is moving forward makes it uh tough and challenging for people like jan eva and myself um to to keep up the pace with the private sector that's very obvious but um on the other side um you know we want to also make sure that we that we do what we can to foster the innovation by doing things that only the public sector can do um and i can give you sort of two examples on that um that we're trying to promote on the one side um in the um in the um using the blockchain and dlt for securities um we recently did a very substantial um test um of a settlement interface for electronic securities um where deutsche baza deutsche bundesbank and the german finance agency um announced that they've developed um and successfully tested a settlement interface for electronic securities um working together between you know the public sector entities and the private sector entities with the goal of establishing a technology bridge um between the blockchain technology and conventional payment systems that allow you to settle securities in central bank money so i think that's sort of a one of the ideas that we have the other one of course which everyone is doing after the big success of a few baltic states is to um to make progress on digital identities so i think that's a huge um also um innovation driver potentially if we get this right um and we want to um we want to uh also be very european on that so our project is embedded in the european ecosystem of digital identities project um which will be realized on um on on self-sovereign identities um as so-called verifiable credentials and i think that's also one of these things um where where we can make sure that on the one side um we um the the credentials themselves don't leave the respective holders a lot of space but the system uses the distributed ledger technology to enable verifiers to make i'm sure that the credential has been issued um has been issued by the claimed entity so the veracity element of this i think is extremely important and of course you know governments are can do a pretty good job if they do it right in establishing this this verification element so i think that's uh and especially making sure that it hasn't been revoked and uh all of these things so you can counter check whether an um id has actually been issued with exactly the data that is presented that the id is still valid and hasn't been declared as stolen or invalid so so we we try to set up the framework to make these uh these things safe and sound which also gives um the the private sector the the soundness and safety to make investments on this basis um the german banking sector is already taking place um i'm taking uh participating um establishing use cases um you know the our hotel industry is participating because we have the idea of sort of a straight through check-in where basically you you can do your registration through your digital id you have a link to your credit card um and uh basically do everything just with one um with one um usage of your of your smartphone so i think that's um that's one of the important things and we're doing it together with the european commission because of course again very naturally um this can only work um if we if we sort of embed all of the different national id systems in the e-i-d-a-s regulation to make it european and uh and sort of fungible between european member states i think that's also a very important element to our attempt at being innovative with government documents for example i think it sounds like it will definitely be uh even more successful than just a basic attempt and certainly what yourself and the chancellor are pushing on this is exciting i think for the private industry and generally even through the last couple of days discussions you know after cbdc's and central bank digital currencies i think digital id is the second place where people are really excited that governments do something with dlt and again like you say something a bit transformational something makes a real european identity something that we can now use when we go country to country um even again if that is a few months away depending on how the coveted situation unfolds uh your example of checking into a hotel maybe dream many months ago of checking into you know very depressing hotels generally in brussels and luxembourg but for once i'm now really missing them uh but anyway thanks uh those cookies for the summary and maybe i'll just round out this kind of general discussion on their approach before we we finish up on the quick fire round or sort of next steps with you agatha um and you've used a couple of phrases i loved previously over how europe tends to have an approach to new technologies of capturing and controlling them rather than necessarily sort of embracing and encouraging them do you think this is happening with blockchain are we getting the balance right and particularly i mean one of the questions that came in from the spectators was you know are we really ahead or behind of other jurisdictions in this approach i'd be interested in your view of how right we're getting the approach overall uh well i think we certainly uh certainly the first ones as this large uh jurisdictional region who came out came up with the proposal regulatory proposal for this space and i i mean the whole digital finance package but especially in mica and five regime and it is very you know it has already been mentioned here the it is a matter of calibrating and arriving at the balance between mitigating risks and encouraging and supporting innovation and there is not there is no off-the-shelf regulatory framework ready anywhere to look to look for already regulatory architecture for this space so the quest for the adequate regulatory design for this space is is ongoing and we certainly leading that quest with our own bespoke very comprehensive very prescriptive and detailed regulatory proposal so this is something we are definitely at the forefront and and i'm sure that the rest of the world is watching and if they will either copy our approach like on gdpr many countries have or they will distance themselves from uh to gain a competitive advantage so our role is now to get it right and um this is a very difficult task but uh the dialogue is ongoing and i hope we will get it right because with this kind of prescriptive approach uh if we if we don't then we will have to go through the legislative process to adjust it and or amend it at some point and this is a very large region the process is very long so you know we are not perhaps as agile as a single jurisdiction a small country which can quickly adjust and adapt to the changes so the task is enormous but uh but we are doing it first so i think it's it's where it's a momentous regulation certainly momentous effort on all parts and hopefully we can arrive at some uh some optimal solution and i know that there are discussions ongoing about what eva has already mentioned which is the definitions and the approach to defy et cetera so this is something that we're still still working on and discussing but there will be a regulation at the end of it and hopefully one that everyone will follow so on that we are certainly the first uh in if we are the first in terms of uh you know the the level of innovation then we have to remember that the world is very big and there are other very very dynamically developing regions that the innovation the innovators the developers they're looking for home they're looking for the friendliest friendly place and in the digital world it's a very it's very easy to move from place to place so if there is an environment that is not suitable it's very quick decision to move to some other place we just have to make sure that we are the home for our homegrown and foreign innovation if possible so that sounds like a challenge maybe just to pick up on that i got that i mean one of the questions that came in is we're often talking about europe right and europe's approach here even the title of the ebc right has europe in it i mean is there a worldwide group is there a worldwide approach just looking at these things because clearly when it comes to default right that's the whole concept that it's beyond borders it's beyond jurisdictions um you know is there a way where europe can obviously be leader by setting its own standards but is there something more we should be doing at sort of the global level is there even a forum to help those discussions i think this is the next big challenge for the regulators the need for international coordinated approach and what has certainly brought that into focus is those the libra project for example and this kind of project that are that have potential of a global scale that have made us all realize that it's probably no longer enough to think in a in the scope of our own jurisdictions that at some point the regulators the supervisory bodies will have to have more coordinated more global approach with a more global outlook and certainly at this at this space at this time it's not happening yet but the need for that certainly is i mean there are some uh some areas in which we already have a global approach like anti-money laundering and recommendations that's pretty much almost global so this is an example of that kind of international coordination but in terms of everything else it's a piecemeal approach at the moment each jurisdictional region has its own and its own challenges as well and there are differences in legal systems there are differences in economic development there are differences in regulatory mandates that the authorities have different different needs and different needs of the governments different needs of the societies so this is currently still a very very diverse very fragmented overall global kind of situation i can i can definitely relate to even just a number of different jurisdictions i myself am trying to follow crypto regulation in from the uk to india to a number of countries in sub-saharan africa um yeah it's going to be a busy space and maybe i can encourage daniel and victoria to set up the worldwide blockchain convention or for next year or to at least help us have some more global discussions um but anyway thanks guys for again a fantastic summary just moving towards the conclusion now maybe we'll just go sort of a quick fire round in a minute each in terms of you know what really the next step should be over the next sort of 12 and 24 months from your perspectives and maybe even i can i can start with you in terms of the fact you know there's activity like the central bank digital currency there's digital identity there's micah there's regulation from your perspective what does the priority need to be in europe again for that short term we have ahead of us well definitely not just the ambition but um i think we have to realize to become leaders into a new smart and friendly regulation of the internet in general and under the prism of the pandemic we see this digital transformation taking place in every sector so we are lacking a bit behind so we have to manage to um to set the rules right from the beginning in order to not create more friction there but to allow innovation to happen and this should happen in several layers so data of course a clear gdpr not just for sensitive data but any data and transaction data especially since we're talking about blockchain to make sure we will have not just the software um regulations but also hardware we're gonna have investments into um 5g into having supercomputers and exploring how micro sensors can be produced and controlled also in the european uh level and how we can as you mentioned before discuss and make clear definitions in order to understand also the liabilities and this would help in the end uh deciding what is defined not for example and of course to set the rule uh rules and common standards that we could also let's say outsource and we could we could make sure we will influence other countries we will collaborate with to follow the same common standards the minimum you don't have to overdo it you don't have to have more regulation less innovation you can have and strike the gold balance and since we are working on the dsa dma and the data governance and the ai i think this is like a big package that it's uh it has the ambition to to to make europe the the global uh standard setter uh but for good for citizens and not to create as i said more frictions because in in this specific discussion for dlt this is actually something we haven't seen before europe to decide to create something beyond borders and and allow national authorities to give you permission that would be a passport for the whole europe so this is i would say quite amazing and um i believe we have to let's say we have to to test it and we have to create similar architectures for uh for other technologies that are emerging uh constantly to be open and uh maybe to to translate properly in the digital era what the uh what the rule should be and and be open-minded um anyway so i'm quite excited because we are like constantly working and as i said while we try to understand and make sure we are ready for blockchain and then crypto assets and dlts and you have the nfcs and you have different kinds of divides to discuss so um i think we're gonna have interesting times ahead and i hope we're gonna have more discussions with the excellent speakers and thank you for inviting me and organizing it because it's been very helpful to listen to them and while we are in this process thank you and i'm quite optimistic that europe can have this role globally let's let's hope so and as you say i think that chinese probably careful about living in interesting times means that yeah it'll be an interesting challenge ahead also to do well out of them and maybe jan uh just over to you same sort of quickfire question which is just you know my car's obviously under debate it's clearly going to be concluded and adopted in some form now what do you see is the next steps what's the priority after my car for the commission i think i think just two points on this one number one uh the most important thing is that those innovators who are working in europe and we have many of them that they actually continue their work i mean uh digital finance and uh the dlt based finance doesn't start with mika or with the pilot it exists and and uh so the the first challenge is simply to just continue on the basis we have support with um funding with uh with uh additional uh let's say support wherever that's possible uh and i think the second priority i would mention is once indeed amica is in place and the dlt pilot it's really for the for the supervisors to to uh to implement this and to get it right uh in in in a proper manner uh because many of the challenges they are regulatory but uh there are probably even more supervisors because it's then indeed only once the supervisors based on the rules actually are actually satisfied with the neural projects that indeed they can really scale up to a larger extent and i think it would also in that sense i will probably that defy yes it is a fundamental challenge but it's probably for the supervisors maybe even more than for the for the regulators because they need to uh come to grip with this so i think those would be for me the two uh what's next ones on the one hand just kind of continue to do good work which is happening here of the good project and the second one indeed really make sure that the supervisors in sandboxing in uh in testing environments domestically across borders that they actually do there that they they really uh put this into the to the core of their heart actually to uh to come to grip with this new area so if you're a blockchain expert listening expected job offer for some european supervisor or or regulatory policy making body at some point in the near future i think i hope not only one exactly exactly probably a lot and and i think at the end of the day i mean i have a lot of faith that governments are going to get their control over this uh one way or the other um there's a great quote which i'll probably not do justice to but essentially you know money is whatever the people with guns say it is and at the end of the day you know it's governments that are in control can tell people how these things can be regulated how they can be used so um one way or the other i think that we'll get to a hopefully good outcome maybe i'm gonna just to again sort of finish off this round in terms of uh that speed of action is europe moving fast enough you know china's got a central bank digital currency live today right with merchants you can pay for goods with you know we're many years away from that um are we really keeping pace for the rest of the world what's your perspective well from that perspective we we not from that perspective on digital currency digital euro we are a few years behind and and this is this is something we have to we have to realize and focus on and now that i think i believe that the focus is here and the the trigger has been as i mentioned earlier probably projects like libra which is uh you know it highlighted the risks but the contribute the contribution of projects like this is to focus everybody for for good or for bad reason but everyone is listening now the potential of this technology has been illustrated has been exemplified so we are now focused we are now discussing and i think this is just this is not a question that we should compete and we should stand in that race is the question of how do we catch up with the with the the other uh very dynamically developing jurisdictions for on a political front on the economic front and on the regulatory front how do we catch up and how do we not stay behind because the risk the risk of staying behind and even the risk of losing even a year or two in that race it might be to some extent irretrievable loss that we would we will find very difficult to recover from if we do not make sure that we are definitely shoulder to shoulder with those that are first in that right so it sounds like we're going for big stakes which is a a good challenge to everyone on this call and again i think it's a nice testament that you've all devoted your time to this but particularly maybe um dr cookies i'll give you the last word when you speak to your counterparts from other sort of finance ministries when you talk at the very senior political level you know what do you think that uh again europe and germany needs to do to make sure that we get this right as europe and we again find success in this new dlt era we're all now apparently already living in yeah i mean i think um the two uh the two acronyms uh that uh that count are mika and dora right i think if europe as the uh uh first big region manages to establish rules in this uh in this area and it'll be a huge benefit for us and it'll also um make sure that uh that the the europe becomes a standard setter in this area and of course um how do we become the standard setter and we become the standard setter by finding a good balance between um what we discussed earlier the the classic uh um two poles of um innovation and fostering innovation on the one side and making sure that financial stability and consumer protection is maintained on the other side that's what incentivizes consumers to use the technology companies to to invest and on the other side establishes a a solid framework um and with that then this whole process of tokenization of traditional financial instruments on the one side um and investor protection on the other um can actually be a huge success and could actually pave the the way towards making standards in europe sort of uh to into global standards so i think that's very important on this other side i think also europe can become the first big region um of economic significance to find a balance on the stablecoin rules and regulations as i said um you know the safety is extremely important the access to collateral and the denomination the knowledge and transparency around risks that are involved um the maintenance of um monetary sovereignty on the other side i think those are all extremely important elements and so the digital finance package is really the the the key item that we should all focus on in 12 to 24 months and i think um everything that we're discussing with eva and jan in this direction indicates that the co-legislators in europe are on the same page of this in terms of assessing the importance of this topic that's a that's a great cold action and i think i mean europe it's always a challenge getting 27 different countries to agree to things particularly with a number of other participants but the good news is after that very difficult process normally you have relatively good rules so if you can get 27 different countries with different cultures different priorities different again challenges to agree probably that's a great blueprint for the rest of the world to follow so again thank you so much uh your cookies jan eva agata for spending your time it was a great discussion look forward to catching up again hopefully in a year's time hopefully in person with a glass of wine in hand or in some worldwide location if daniel is encouraged to take this european discussion let's go global with it so thank you again have a very good afternoon to all of you and to the participants and back to you daniel to wrap us up thank you