Page 15 - March 2018 Disruption Report

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The Holy Grail in the capital market space today is “How do I shrink the time between trade and settlement?” There’s this whole t plus three and we’re spending billions of dollars to go to t plus two, we gain a day, so the trade day and the settlement date are two days apart. I mean you just think about kind of the absurdity of that. If you just say well if the security that you’re buying is a digital asset, and the money that you’re buying it with is a digital asset, and they both exist on either the same network or an interoperable network, the transfer
of ownership and the transfer of value happen together as two operations or a single operation in one atomic transaction, you’ve solved the problem.
...[D]elivery versus payment, that’s what the capital markets industry is trying to optimize for, right? Because it improves the balance sheet of all sorts of nance.
...The concept of programmable money comes out of a paper that I jointly authored with Jed McCaleb who is the founder of Stellar and was the co-founder of Ripple and is a really smart guy... We really wrote it in the context of central banking and the ultimate issuer of an asset because central banks are the issuers of currencies.
Right now the primary dealers, if you will, for currencies are commercial banks. So that whole commercial, central, fractional reserve-banking model has been replicated from the western world to everywhere else in the world. You can’t get access to central bank money as they say. But if the central banks were to issue digital currencies which is essentially a token of at currency, so you own the token, you own a claim of at deposits held on the balance sheet of the central bank, now you have the ability to move that around. You can actually program the movement of money because it’s a digital thing, it’s a digital asset that’s as good as cash. ...[I]t’s actually legal tender because if the central bank issues it,
it becomes legal tender which means everybody who accepts it has to accept that form of payment. That’s pretty profound if we can get to that point and we’re working with [central banks].
... You fast forward a little bit and think where that takes us. It’s no secret that the U.S. dollar is the trade currency of the world ...but there are other large G20 nations who wouldn’t mind dethroning the U.S. dollar as the trade currency of the world and ...central banks starting to get involved in the issuance of digital currency. You create a situation where all of a sudden well maybe oil could be traded n other currencies besides the U.S. dollar which is all it’s traded in today.
If you have a central bank issued token, you’ve essentially extended the real time gross settlement system, which has been only accessible by commercial banks to anybody that
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