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 The	
  Future	
  of	
  Currency	
  	
  
	
  Insights	
  from	
  Discussions	
  Building	
  on	
  an	
  Ini4al	
  Perspec4...
Context	
  
This	
  ini4al	
  perspec4ve	
  on	
  the	
  Future	
  of	
  Currency	
  kicked	
  off	
  the	
  	
  
Future	
 ...
A	
  New	
  Order?	
  
We	
  are	
  witnessing	
  the	
  transi4on	
  to	
  a	
  new	
  order:	
  New	
  na4onal	
  intere...
Combining	
  Currencies	
  Doesn’t	
  Work	
  
A	
  cri4cal	
  lesson	
  that	
  Europe	
  has	
  taught	
  Asia	
  is	
  ...
The	
  US	
  is	
  in	
  Flux	
  
60%	
  of	
  the	
  world’s	
  output	
  is	
  linked	
  to	
  the	
  dollar.	
  It’s	
 ...
US	
  Global	
  Control	
  
Some	
  countries	
  have	
  build	
  up	
  significant	
  dollar	
  reserves	
  but,	
  for	
 ...
New	
  Trading	
  Routes	
  
The	
  next	
  decade	
  will	
  see	
  the	
  post-­‐war	
  routes	
  eclipsed	
  by	
  the	...
Cross-­‐Border	
  Commerce	
  
	
  Cross-­‐border	
  commerce	
  is	
  growing	
  faster	
  than	
  domes4c	
  commerce	
 ...
China	
  as	
  Asia’s	
  Voice	
  	
  
Despite	
  growth	
  of	
  other	
  ASEAN	
  na4ons,	
  for	
  the	
  next	
  decad...
ShiHing	
  Power	
  and	
  Influence	
  
The	
  centre	
  of	
  gravity	
  of	
  economic	
  power	
  con4nues	
  shi^ing	
...
Sleeping	
  Eagle	
  -­‐	
  Waking	
  Dragon	
  
China	
  uses	
  economic	
  might	
  and	
  so^	
  diplomacy	
  to	
  re...
China’s	
  Influence	
  is	
  Extending	
  	
  
China	
  is	
  opening	
  up	
  and	
  wants	
  the	
  natural	
  privilege...
The	
  Start	
  of	
  Change	
  for	
  the	
  Yuan	
  
Special	
  Drawing	
  Rights	
  (SDRs)	
  are	
  a	
  start	
  as	
...
 Good	
  RegulaOon	
  is	
  Significant	
  –	
  for	
  Stability	
  and	
  Confidence	
  
The	
  response	
  to	
  the	
  20...
Born	
  Free	
  
Change	
  across	
  all	
  regions	
  is	
  inevitable:	
  The	
  emerging	
  markets,	
  	
  
free	
  of...
Global	
  vs.	
  Bilateral	
  Agreements	
  
A	
  key	
  ques4on	
  for	
  the	
  next	
  decade	
  will	
  be	
  whether	...
Technology	
  has	
  Increased	
  the	
  Speed	
  of	
  Currency	
  Trade	
  	
  
With	
  profit	
  as	
  the	
  mo4vator	
...
TradiOonal	
  Currencies	
  are	
  Being	
  Challenged.	
  	
  
Blockchain	
  is	
  to	
  trade	
  and	
  currency	
  what...
Changing	
  Times	
  
Tradi4onal	
  currencies	
  as	
  a	
  means	
  of	
  exchange	
  are	
  challenged	
  by	
  	
  
th...
Currencies	
  of	
  Meaning	
  
New	
  trusted	
  currencies	
  of	
  exchange	
  emerge	
  to	
  befer	
  facilitate	
  t...
Digital	
  Money	
  
Cash	
  is	
  gradually,	
  but	
  not	
  completely,	
  replaced	
  by	
  digital	
  money	
  provid...
Low	
  Value	
  Payments	
  	
  
One	
  area	
  that	
  is	
  likely	
  to	
  see	
  significant	
  transforma4on	
  is	
  ...
ProliferaOon	
  of	
  Currencies	
  
People	
  will	
  increasingly	
  use	
  mul4ple	
  forms	
  of	
  currency	
  in	
  ...
Unfit	
  For	
  Purpose	
  
Perhaps	
  it’s	
  now	
  4me	
  to	
  recognise	
  that	
  the	
  way	
  we	
  manage	
  money...
Empowering	
  the	
  Crowd	
  
In	
  the	
  future	
  anyone	
  will	
  be	
  able	
  to	
  trade,	
  immediately	
  knowi...
Pick	
  and	
  Mix	
  
As	
  banks,	
  companies	
  and	
  communi4es	
  all	
  provide	
  different	
  	
  
currency	
  op...
Imagined	
  RealiOes	
  
Currencies	
  are	
  no	
  longer	
  backed	
  by	
  assets	
  like	
  gold	
  but	
  by	
  a	
  ...
Global	
  Currency	
  PlaVorm	
  	
  
Alterna4ve	
  currencies	
  gain	
  trac4on	
  and	
  we	
  see	
  the	
  emergence	...
Financial	
  Services	
  DisrupOon	
  
The	
  banking	
  industry	
  will	
  be	
  reinvented	
  by	
  the	
  adop4on	
  o...
Bank	
  Robbers	
  of	
  Tomorrow	
  
As	
  currencies	
  become	
  increasingly	
  digital	
  and	
  unsupported	
  by	
 ...
Market	
  Chaos	
  
The	
  currency	
  markets	
  are	
  chao4c	
  and	
  they	
  are	
  likely	
  to	
  become	
  	
  
ev...
A	
  3D	
  View	
  of	
  Currency	
  
Technology	
  will	
  allow	
  mul4ple	
  variables	
  to	
  be	
  compared	
  in	
 ...
Future	
  Agenda	
  
84	
  Brook	
  Street	
  
London	
  
W1K	
  5EH	
  
+44	
  203	
  0088	
  141	
  
futureagenda.org	
 ...
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Future of Currency - Insights to Date

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This is an updated view on future of currency. Building on the new initial perspective authored by Patrick Teng, CEO of Six Capital, it includes insights from events in Asia and will be added to in Europe as we explore how currency is changing over the next decade.

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Future of Currency - Insights to Date

  1. 1.  The  Future  of  Currency      Insights  from  Discussions  Building  on  an  Ini4al  Perspec4ve  by    Patrick  Teng  |  CEO  |  Six  Capital  
  2. 2. 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  
  3. 3. 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.    
  4. 4. 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.  
  5. 5. 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.  
  6. 6. 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.    
  7. 7. 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.    
  8. 8. 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.  
  9. 9. 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.  
  10. 10. 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.  
  11. 11. 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.      
  12. 12. 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.    
  13. 13. 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.  
  14. 14.  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.    
  15. 15. 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  
  16. 16. 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?  
  17. 17. 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.    
  18. 18. 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.  
  19. 19. 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.      
  20. 20. 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.  
  21. 21. 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.    
  22. 22. 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.  
  23. 23. 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.  
  24. 24. 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.  
  25. 25. 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.    
  26. 26. 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.  
  27. 27. 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.  
  28. 28. 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.    
  29. 29. 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.  
  30. 30. 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’.  
  31. 31. 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.    
  32. 32. 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.    
  33. 33. Future  Agenda   84  Brook  Street   London   W1K  5EH   +44  203  0088  141   futureagenda.org   The  world’s  leading  open  foresight  program   What  do  you  think?   Join  In  |  Add  your  views  into  the  mix     www.futureagenda.org  

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