Future of Currency - Insights to Date

The
Future
of
Currency

Insights
from
Discussions
Building
on
an
Ini4al
Perspec4ve
by

Patrick
Teng
|
CEO
|
Six
Capital

Context

This
ini4al
perspec4ve
on
the
Future
of
Currency
kicked
oﬀ
the

Future
Agenda
2.0
discussions.
This
updated
summary
includes
addi4ons
from

events
to
date
to
be
further
challenged,
built
upon
and
enhanced.

Ini4al

Perspec4ves

Global

Discussions

Insight

Synthesis

Sharing

Output

A
New
Order?

We
are
witnessing
the
transi4on
to
a
new
order:
New
na4onal
interests,

new
trading
routes,
new
products
/
services
are
all
emerging.
How
to
ensure

the
development
of
trade
in
this
environment
will
be
key
to
success.

Combining
Currencies
Doesn’t
Work

A
cri4cal
lesson
that
Europe
has
taught
Asia
is
that
combining
currencies

doesn’t
work.
Over
the
long
term
neither
do
currency
pegs…
Many
expect

that
the
next
decade
will
see
an
unraveling
of
the
European
model.

The
US
is
in
Flux

60%
of
the
world’s
output
is
linked
to
the
dollar.
It’s
easy
to
see
the

advantages
of
this
for
the
US
but
not
for
everyone
else:
The
system

does
not
include
a
guaranteed
lender
of
last
resort.

US
Global
Control

Some
countries
have
build
up
signiﬁcant
dollar
reserves
but,
for
many,

the
cost
of
its
dominance
is
beginning
to
outweigh
the
beneﬁts,

par4cularly
as
the
US
share
of
world
trade
and
GDP
is
in
decline.

New
Trading
Routes

The
next
decade
will
see
the
post-‐war
routes
eclipsed
by
the
power
of
the

Indian
Ocean
region
with
new
port
construc4on
plus
proposed
railways
from

coast-‐to-‐coast
across
South
America
showing
the
shape
of
things
to
come.

Cross-‐Border
Commerce

Cross-‐border
commerce
is
growing
faster
than
domes4c
commerce
and
so
will

become
increasingly
important
and
influen4al.
Cross-‐border
flow
of
goods,

services
and
finance
could
increase
threefold
to
$85
trillion
by
2025.

China
as
Asia’s
Voice

Despite
growth
of
other
ASEAN
na4ons,
for
the
next
decade
China
remains

the
clear
economic
leader
in
the
region
–
becoming
more
inﬂuen4al
as
the

primary
source
of
capital
and
the
voice
of
Asia
on
the
world
stage.

ShiHing
Power
and
Inﬂuence

The
centre
of
gravity
of
economic
power
con4nues
shi^ing
eastwards,
back
to

where
it
was
200
years
ago.
Recent
superpowers
seek
to
moderate
the
pace
of

change
but
the
reali4es
of
popula4on
and
resource
loca4ons
are
immoveable.

Sleeping
Eagle
-‐
Waking
Dragon

China
uses
economic
might
and
so^
diplomacy
to
reshape
the
world
order,

usurp
the
dollar
and
dominate
world
trade.
As
a
result
migra4on
to
Asia

increases,
changing
established
market
places.
Africa
will
suﬀer
as
a
result.

China’s
Inﬂuence
is
Extending

China
is
opening
up
and
wants
the
natural
privileges
a
vast

economy
might
expect:
a
big
say
over
global
rules
of
ﬁnance

and
trade
and
a
widely
used
currency.

The
Start
of
Change
for
the
Yuan

Special
Drawing
Rights
(SDRs)
are
a
start
as
they
eﬀec4vely
mean

oﬃcial
recogni4on
by
the
IMF
that
the
Yuan
is
ac4ng
as
a

reserve
currency
despite
China’s
extensive
capital
controls.

Good
RegulaOon
is
Significant
–
for
Stability
and
Confidence

The
response
to
the
2008
crisis
has
not
had
the
desired
effect
-‐
limi4ng
the

ac4vity
of
bankers
but
enabling
asset-‐rich
investors,
sovereign
wealth
funds,

hedge
funds,
hungry
for
new
investments,
to
take
a
greater
share
of
the
pie.

Born
Free

Change
across
all
regions
is
inevitable:
The
emerging
markets,

free
of
constraint,
are
likely
to
seek
to
stabilize
their
currencies

and
so
be
able
to
support
more
foreign
investment

Global
vs.
Bilateral
Agreements

A
key
ques4on
for
the
next
decade
will
be
whether
we
will
be
able
to
achieve

true
global
agreements,
or
will
bilateral
trade
agreements
remain
the
way

by
which
na4ons
can
befer
manage
and
control
economic
inﬂuence?

Technology
has
Increased
the
Speed
of
Currency
Trade

With
proﬁt
as
the
mo4vator
and
with
deal
speed
at
a
premium,
currency

traders
are
rarely
able
to
pause
to
consider
what
the
impact
of
their

transac4on
could
be
on
a
wider
society.

TradiOonal
Currencies
are
Being
Challenged.

Blockchain
is
to
trade
and
currency
what
email
was
for
the
postal
service.

It
is
allowing
direct
trade
without
recourse
to
a
trusted

third
party
and
at
a
frac4on
of
the
transac4on
cost.

Changing
Times

Tradi4onal
currencies
as
a
means
of
exchange
are
challenged
by

the
growth
of
non-‐tradi4onal
payments
systems
and

peer-‐to-‐peer
currency
exchange
and
remifance
ﬁrms.

Currencies
of
Meaning

New
trusted
currencies
of
exchange
emerge
to
befer
facilitate
transac4ons,

trade,
authen4ca4on
and
valida4on.
Money
as
a
means
of
exchange
is

complemented
by
new
systems
to
which
we
afach
increasing
signiﬁcance.

Digital
Money

Cash
is
gradually,
but
not
completely,
replaced
by
digital
money
providing

consumers
with
more
convenience
/
choice
–
and
organisa4ons
with
lower

cost
transac4ons.
More
new
oﬀers
emerge,
including
in
the
black
economy.

Low
Value
Payments

One
area
that
is
likely
to
see
signiﬁcant
transforma4on
is
low
value
payments
-‐

everyday,
high-‐frequency
purchases
for
which
cash
is
used
(typically
sub
$10

transac4ons)
and
make-‐up
the
bulk
of
cash
transac4ons
today.

ProliferaOon
of
Currencies

People
will
increasingly
use
mul4ple
forms
of
currency
in
diﬀerent

contexts:
alongside
na4onal
legal
tender,
we
will
see
more
local

and
crypto-‐currencies
–
many
decoupled
from
exis4ng
systems.

Unﬁt
For
Purpose

Perhaps
it’s
now
4me
to
recognise
that
the
way
we
manage
money

is
not
ﬁt
for
purpose
in
today’s
world
and
is
unlikely
to
adapt

to
the
changes
over
the
next
decade.

Empowering
the
Crowd

In
the
future
anyone
will
be
able
to
trade,
immediately
knowing
the

amount
they
are
paying
in
the
currency
of
their
choice.
The
number
of

par4cipants
will
drive
the
market
rather
than
single,
large-‐scale
investors.

Pick
and
Mix

As
banks,
companies
and
communi4es
all
provide
diﬀerent

currency
op4ons,
users
pick
and
mix
to
suit
their
needs:

Expect
a
mul4-‐4ered
currency
system
to
be
normal.

Imagined
RealiOes

Currencies
are
no
longer
backed
by
assets
like
gold
but
by
a
belief

in
the
economy
and
imagined
reali4es.
New
currencies
will
emerge

built
on
percep4ons
of
stronger
trust
and
more
tangible
assets.

Global
Currency
PlaVorm

Alterna4ve
currencies
gain
trac4on
and
we
see
the
emergence
of
a

parallel
global
digital
currency
plaiorm
that
operates
without
na4onal

borders
-‐
and
outside
the
inﬂuence
of
the
central
banks.

Financial
Services
DisrupOon

The
banking
industry
will
be
reinvented
by
the
adop4on
of

crypto-‐currencies
that
also
cause
further
disrup4on
around
insurance,

liability,
audi4ng,
notary
and
other
associated
professions.

Bank
Robbers
of
Tomorrow

As
currencies
become
increasingly
digital
and
unsupported
by
the
state,

so
deposits
are
increasingly
virtual
and
dispersed
and
therefore
poten4ally

vulnerable
to
a
new
genre
of
‘bank
robber’.

Market
Chaos

The
currency
markets
are
chao4c
and
they
are
likely
to
become

even
more
so
over
the
next
ten
years
as
na4ons
increasingly

unpeg
themselves
from
the
dollar
and
other
currencies.

A
3D
View
of
Currency

Technology
will
allow
mul4ple
variables
to
be
compared
in
real-‐4me,

producing
a
3D
view
allowing
traders
to
consider
what
they
are
buying,
why

they
are
buying
it
and
the
impact
that
this
may
have
instantaneously.

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Agenda

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Future of Currency - Insights to Date

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