ITU: Mr. Chairman, Congratulations on the completion of the First Meeting of the FG DFC. Can you tell me a bit about the Meeting and Workshop?
Chairman David Wen: The ITU Focus Group on Digital Currency including Digital Fiat Currency was officially inaugurated on October 12-13th in the main Auditorium of Chinese Academy of Social Sciences (CASS) in Beijing. As the Chair of the Focus Group, I want to extend my most sincere gratitude to the great enthusiasm and hard work of our hots, the ITU-T and CASS teams. It was a successful gathering that went beyond my wildest dream. As the Head of Study Groups of ITU-T Dr. Bilel Jamoussi remarked in closing of the Programme that this meeting was the most successfully attended inaugural ITU Focus Group meeting he has joined. Over 140 delegates, from more than 40 countries and including 20 central banks and regulatory agencies took part in the two days’ events.
ITU: Tell me more about the Focus Group; what is its core objective?
DW: The main objective of ITU FG-DFC is to provide a highly inclusive forum where central banks, regulators, financial institutions, FinTech innovators, consumer advocacy groups, and security professionals can openly exchange information and discuss current state of digital currency and digital fiat currency technology. The group will survey, study, and assess the benefits, risks, and economic impacts, so that decision makers and technology providers can work together to take advantage of the ways in which Digital Currency and Digital Fiat Currency can better the lives of ordinary people through innovation in delivering universal financial access.
ITU: We have seen questions about Digital Currencies in headlines in recent months. To what extent does the work of this Focus Group take on current events and trends in the space?
DW: In recent months, there has been lots of reporting on the chaos created by the volatility of the various types of crypto currencies, and we are hearing ‘wild west’ stories of unregulated Initial Coin Offerings. Many countries such as China, Korea, India, Russia, and Singapore have reacted quickly to these: putting breaks on these activities using existing regulation.
The need for the central bank to lead the way on the digitization of currency both from a regulatory and infrastructure perspective was clearly and succinctly articulated by Dr. Yao Qian, Vice Chair FG DFC and Director of the Institute of Digital Money (IDM) of the People’s Bank of China, in his keynote speech in our meetings in Beijing. Vice Chair Yao spoke to the fundamental building blocks of Digital Fiat Currency and articulated his vision for its governance and architecture.
In a time of loose definitions of terms and flashy headlines, the work of this Focus Group to provide an open forum, representing many views and working to define terms and evaluate risks and benefits is crucial.
There is clear eagerness for the work. Dr. Yao’s speech was widely reported by the media, both in China and internationally and well received by the delegates. The need for the open forum to discuss Digital Fiat Currency, or a Central Bank issued Digital Currency, was evidenced by the TSAG consensus to establish this very ITU Focus Group and is further evidenced by the enthusiastic support from our Beijing hosting institutions, the Institute of Digital Money of People’s Bank of China, the China Academy of Information and Communication Technology, and the Chinese Academy of Social Sciences. CASS Director Zhou emphasized that this gathering stood out as one of the most successful and impactful international meetings ever hosted by CASS.
ITU: You mention Dr. Yao’s speech, can you describe more of the First Day’s Workshop?
DW: The opening session was followed a panel headed by ex-governor of the Central Bank of Kenya, Njuguna Ndung’u on what role should the Central Bank play on regulating DFC and what economic benefits could result for the populations. Our host, Ms. Tian Huifeng of the Institute of World Economics and Politics, presided on a panel on the Global Trends in Digital Financial Access across the globe. After lunch at CASS cafeteria and group photo, the audience was treated with very detailed technical presentation by the vice director of Institute of Digital Money, Mr. Di Gang, followed by a lively Q&A.
The next panel discussion was hosted by ITU head of standards and study groups, Dr. Bilel, with the provocative title:“Who will deploy DFC first: developing or developed countries?” The group discussed what problems DFC would solve for these nations, and after a rich discussion, panelists from the US, China and Tanzania gave a almost unanimous vote that developing countries will be first to deploy.
The final session of the day featured a panel of security experts: Ed Scheidt from ISO digital currency security working group, Mr. Sun Lilin from well-known DLT hardware security company Juzix, and hosted by ITU veteran Mr. Yuri Grin. Simultaneous translation of English and Chinese were provided through the generous donation by Juzix.
The very fruitful first day Workshop was capped with a wonderful reception at the grand Beijing International Hotel. I received many compliments on the reception, not only for the great Chinese food that was provided, but for the meaningful networking opportunities that followed: nobody wanted to leave!
ITU: The Workshop was followed by the Formal Inaugural Meeting of the FG DFC. Can you provide details of the Meeting’s Programme and outcomes?
DW: Certainly. The second day began with opening remarks by Mr. Chen Baoshan who led the paper currency management operations in China for over thirty years. The most memorable excerpt from his remarks was his graceful analogy of the ancient Chinese coin, which that is square inside and round outside: the square stands for rules and regulations at the center of fiat currency, and the round outside symbolizes the lubricating effect fiat currency has for the real economy by being the medium of exchange accepted by all.
The Day’s finale was a presentation given by Klaus Lober, the Chair of Digital Innovation Working Group of Committee for Payment and Infrastructure Committee (CPMI) of the Bank of International Settlement, on the current status of Digital Currency development around the world, and a follow up interview led by Dr. Yang Yanqing of Yicai Media Group.
With the help from ITU’s Dr. Bilel and Mr. Vijay Maureen, the first meeting of the ITU FG DFC ran smoothly, efficiently, and fruitfully. my first ITU Focus Group session went very smoothly, further proof of all the hard work and professionalism that went into the preparation of this meeting. As the first Focus Group meeting where the objectives and deliverables of the Term of Reference were re-affirmed, Vice Chairs were nominated and approved, three working groups were subsequently created with great enthusiasm from the delegates. Each working group had more than two dozen of delegates signing on, and we look forward to inviting more stakeholders as the work begins in earnest.
The following three working groups were created with leaders and co-leaders elected.
Working Group I: “Regulatory Requirements and Economic Impact,” will be headed by Professor Njuguna Ndung’u, Former Governor of the Central Bank of Kenya who oversaw the introduction of mPesa and who advocated for financial inclusion through mobile money. He will be assisted by Ahmed Said from Egypt Telecom Authority, who is also Vice Chair of the ITU Study Group 3, which examines economic and policy issues of telecommunication technology.
-Working Group II: “Ecosystem & Reference Architecture,” will be headed by Dr. Yao Qian of the Institute of Digital Money, People’s Bank of China. With a in-depth presentation of the existing architecture work done by IDM, presented by Vice Director Di Gang of the same institute, Dr. Yao is well positioned to lead this group to generate comprehensive reports on what DFC reference architecture should contain and provide insight through the research on various layers of the DFC ecosystem.
-Working Group III: “Security,” will be co-lead by Mr. Yuri Grin from Intervale and Mr. Sun Lilin from Juzix. This group will have a broad scope ranging from Cyber security to hardware security, described in detail by Mr. Sun Lilin. The group will formally share its work with the ISO Digital Currency Security Group via official Liaison statement.
ITU: Mr. Chairman, thank you for this report and congratulations again on the Inaugural Meetings. Do you have any final thoughts?
DW: It was the most exhilarating two days for me, and I dare say, for the team who put this together.
With all the excitement and intellectual stimulation behind us, the hard work of the next two years has just begun. The three working group leaders are busy preparing guiding frameworks and practical workplans. I am so fortunate and happy to be working with this group of wonderful professionals and experts, and grateful for ITU, CASS, CAICT, and DFCI for their generous support and tremendous effort for such a fruitful and successful meeting. We look forward to meeting again next year for the Second ITU FG-DFC workshop and working meeting. See you all next June!