Panelists debate whether rising digital assets, programmable money and advanced systems require new governance and operating models for resilient finance.
At Davos’s “New Era for Finance” session, panelists tried to bridge gloomy macro talk with fast-moving financial innovation. ING CEO Steven van Rijswijk argued the most consequential “rewiring” is agentic AI that can reshape how banks serve customers, but warned that digital tools are only “a means to an end” and failures at the “outer ends” of sensitive journeys can destroy trust. BNY’s Jayee Koffey emphasized interoperability across “public and private markets” and “on chain and off chain,” with AI becoming a “super charger” for real-time risk management. Primavera’s Fred Hu framed AI as “superintelligence” augmenting human judgment across infrastructure, productivity, and societal impact. Binance founder Changpeng Zhao pointed to crypto’s durability and scale, predicting tokenization and AI-agent commerce where “the native currency for AI agent is going to be crypto,” while conceding payments adoption remains uncertain.
The discussion also stressed fragility in a faster system: SVB’s run illustrated how digitization accelerates crises. Panelists split on causes—Zhao blamed fractional-reserve design more than speed—yet agreed proactive detection, faster settlement, and better collateral mobility can reduce risk. On governance, Europe’s MiCA was praised for enabling adoption, while the EU AI Act was criticized for focusing on risk over strategic positioning. Global regulation seemed unlikely; “passporting” recognition across jurisdictions may be the pragmatic next step.
Good morning everyone. So delighted to be here today to talk about a new era for finance. So I'm not sure if any of you have had the same experience as I have at the forum over the last few days, but I feel like there's almost two separate conversations happening here. There's one set of conversations about geopolitics and macroeconomics. This is a set of conversations worried about the fragmentation of the global trading system, about debt, the role of the dollar. These conversations can be quite depressing, quite worrisome, and really been a big focus of a lot of the discussions here. Then the other big focus of the discussions has been on AI and innovation and technology. And this is a really exciting set of discussions about the possibilities for the future, all these exciting new developments going on. And for example, I was at a dinner last night with some MIT colleagues, and they were talking about how AI is allowing them to advance, their scientific breakthroughs even faster than before. They're doing things like they're making water out of air. You can think about what that could mean for space travel, for example, talking about how they're using AI to, break down the structure of cells in plants so that plants can adapt to global warming. And this is really exciting stuff. But it's a real disconnect within the much more depressing macroeconomic and geopolitical discussions. So in this panel today, we are going to take the bold step of trying to merge these different discussions. So we've now had a couple of days to warm up. So we're now going to try to bring these themes together. And more specifically we're going to talk about innovations in financial markets, including not just how these innovations are occurring, what the future could bring, but also think about the regulatory and geopolitical backdrop that these are occurring in, and how the regulatory and geopolitical backdrop can affect these innovations in finance. So I hope you had your coffee. We've got a lot to cover. And these are big topics and exciting to try to bring these big themes of Davos together in this panel. So to do that we have four fantastic panelists covering some very different sectors of innovation in finance and also four different regions of the world. So this is a really nice mix of people for this panel. So let me just very quickly introduce them. You have the full Bios in your packets. First we have Steven Van Wijk, CEO of ING Group from the Netherlands. Then we have Jeff J. Caffrey, who is chief enablement and global affairs officer at BNY Bank of New York. Then we have Fred Hu, who is founder and chairman and CEO of Primavera Capital Limited from China. And then we have, Changpeng Zhao, who we call Z for short. So I don't stumble over that name anymore. Who is CEO of Binance from the UAE, who has just retired? Yes. So he is going to be the particularly fun person to listen to as he now no longer has any constraints on what he is allowed or says. But anyway, the theme of the panel is about how technology is rewiring global finance. And for those of you who follow this field, there is a lot going on. There's a lot going on in forms of payments and currency. There's a lot going on also in the plumbing, the pipes of how financial transactions occur. It's a lot to keep up on. So to just get us started, I want to go down and I'm just going to go in the order you're all seated. And ask you what you think is the rewiring that is the most consequential. What is the development you are most excited about? It could be a segment of markets. What's going on in private credit. The investing bitcoin stablecoin, digital currencies. It could be in technology Bitcoin ledger technology. It could be in more plumbing related issues. I'll leave it really wide open just to get us going. Talk about what you think is the most exciting new development that is going to have the longest term impact in finance. Steven, get us started.
Wow. The pressure. No. Look, ING. We have, broad operations within retail. We have 41 million private individual customers. 85% of those use the mobile as their preferred device. 85% of retail sales is also being done through mobile. And what do I try to say is that most people do already work mostly through mobile with us. So we are a digital bank in the core or in the heart of of of what we do. But it also means that we still have a way to go to get people on the mobile more and more and to use the device more. That is, for us, the first step. So why are our customers to the mobile? Because mobility will help the customer the most. Then the second step is how can we make our customers lives easier in the end? All about the customer and what I'm most excited about, what we can do. And that comes in a few phases. First of all, with and that's AI. We are already using AI for about a decade, for example in contact centers and with chatbots with varying degrees of results. And sometimes it's good, sometimes it's not so good. But now with AI and especially agentic AI, we can improve the customer experience dramatically. It starts first internally with bringing new stuff to market with coding for technology. Then there's a second layer that has to do with customer processes, such as lending processes or contact centers. To make life simpler in the day to day basis for customers. But then thirdly, when do we sell something or bring a new product to to customers in a better way? And there I think Argentic can help. And that's the third layer of AI that I think really can make a difference, because then it sits in the core of what we do, which is how to deal with customers. And that's why I'm very excited about AI.
Fantastic.
Great. So happy to be here. So be. And why the bank that Alexander Hamilton founded over 240 plus years ago. We're now serving clients across over 100 markets, helping clients all over the world. Safekeep move and manage, trillions and trillions of dollars worth of assets across different securities, asset classes, and geographies. So as you can imagine, you know, a variety of rewiring, through different macroeconomic and geopolitical scenarios over the past 240 plus years. I would say coming back to the question today, though, for me, for BNI, it's really about interoperability, interoperability between public and private markets, interoperability across on chain and off chain, interoperability in terms of securities and various asset classes and geographies. And boy, you know, we're very privileged to be able to sit in the middle of all of that and really helping to not only develop innovation, but deploy and scale innovation, because without scale, you know, innovation, you know, the benefits of innovation don't get fully maximized. Steven, I would echo what you said about AI and for and why AI is going to be and has already started being a real super charger of almost everything we do. So we have this motto within the firm of AI for everyone, everywhere, and eventually everything, including one of the most important tenets of the financial ecosystem, which is risk management. So we're actually using AI to improve proactive as well as real time risk management, which, you know, if you go back to the velocity, the complexity of the world that we operate in, risk management is going to become even more important.
Thank you Fred.
Yeah. So, you know, financial service, you know, has, so much data, right? It's ripe for, technology. And so the AI revolution, so financial services, you know, is really a game changer. You know, historically, you know, Wall Street in particular, but financial services in general, has been actually on the forefront of, adopting latest technology and information technology. You know, my old firm, Goldman Sachs, actually, both, you know, and I served, was reportedly the first was the firm to purchase the, you know, IBM mainframe from, Mr. Watson directly. So that shows, you know, late 40s, early 50s. Right. So, financial services firm is always on the forefront of, adopting information technology. But, you know, and of course, financial services is supposedly smart people. You know, graduates from MIT, you know, financial engineers, but fundamentally still rely on, you know, they do a lot of data analytics but still rely on human, judgment right now, the AI. So you have this kind of, you know, superintelligence, all the data available to financial services. And with the AI model, you get, you know, extra intelligence which augment human intelligence. You know, obviously human in the loop, but that is really transformative, you know, from infrastructure to risk management to customer service, you know, the whole, you know, wider chain across financial services. I do think this is, you know, game change. It's transformative, you know, is it going to have, very, very, significant, impact not only for financial services in terms of efficiency, productivity and risk management, but for society, for the global economy at large.
Sure. Well, I look at a very narrow segment of the financial market, which is basically cryptocurrency, blockchain, Web3, however you call it. I do believe that this is this technology is a game changer for sure. And I think we've proven over the over the last 15, 16 years that it's not going away. Binance is is one of the largest crypto exchanges in the world.
It is the largest.
It is by far the largest is larger than the next five combined. But just some numbers, right? You have 300 million users. It's probably larger than any bank that I know. And its trading volume is higher than Shanghai Stock Exchange. It's higher than New York Stock Exchange last year. So it's. But right now in the crypto space, there's really two proven, industries that the exchanges and stablecoins. Those are large businesses. I'm really excited about three new more I think tokenization is a huge one. I'm talking with probably a dozen governments about tokenizing some of their assets, because this way the government can actually realize the financial financial gains first and use that to develop those industries. Extractions, you know, the trading markets, etc.. Payments is something that we've tried have not really conquered in or have not really started in crypto. We tried, but it doesn't. Nobody really pays in crypto. But I think now we're seeing the convergence of traditional payment methods being behind the scenes, being supported by crypto. So the the spenders swipe a card, crypto gets deducted from their account, the merchants gets us dollars or euros or whatever, whatever they get. So now when we have those bridges, I think payments is going to become pretty big. The third one is what you guys all mentioned is AI. The native currency for AI agent is going to be crypto. They're not going to use bank cards. They're not going to swipe, credit cards. They're going to crypto. Blockchain is the most native, technology interface for AI agents. So when AI goes big today, AI don't really they're not really agents. They don't buy tickets for you. They don't they don't pay for, restaurants for you. But when they actually do, those payments will be in crypto.
Okay. So so there's the best case scenarios here. Here's what to get excited about. Now I want to shift gears a little bit about whenever we have a period like this, have lots of innovation, experimentation, you know, some succeed and some don't. So I want to think a little bit about what might not work in ten years from now. If we're sitting on a panel here in Davos, what is one development we might be talking about today that's not even discussed? It's sort of gone by the wayside. Let me just just to get you thinking and give you a couple ideas. So a lot of excitement by all of you about AI. There's also some work going on at MIT where they've come out to show that AI is great to do a lot of work really quickly, but it's sort of mediocre. They call it work slop. You can get sort of 80% accuracy, and if you're fine with that, AI is great. But if you really want to be the best and get things really right, there may be limits. Also, experiment with a Bitcoin. El Salvador worked very hard to push Bitcoin a great way. El Salvador is very reliant on remittances, doesn't have its own stable currency. It seems like a logical place that Bitcoin could really take off for remittances, reduce transaction costs, and there's been almost no take up despite a lot of marketing and a lot of work. So there's just a couple couple of the potential limitations just to give you some time and get you thinking. But now let's go down. Same order. What is again, something that people might be excited about today, or at least some people are excited about today that you think is not going to be even in the discussion ten years from now. Get us started.
Yeah. Let me first respond to to what you just talked about and about, AI not giving a perfect customer experience. And I think that you, you hit the nail on the head because it is about the customer experience. Digital means, are just the means. It's not the end. It is just a means to an end. And when we start to use, AI, you see that also in, in chatbots and you look at the net promoter scores with that, I think they the voice interactions of humans just had a higher score than the initial chatbots. Now, with gen AI, at least on the more simple journeys, you see that that it is comparable. So significant. Step up. Probably voice bots with GI or AI can help with that, because then the interaction becomes much, much more natural. But we are not there yet. And what we should not forget is we need to continue to continuously use technology to make the customer experience better, not the other way around. So that's maybe what I want to say about that. And that's what we need to do as well, because I agree with you that the big group on simple journeys, such as how do I open account or how do I make a payment, can be happy. But if it's about a digital journey on inheritance and it doesn't work well, people don't forget that. And it's at the at the, at the outer ends of the customer experience that we need to be very careful not to be confused about, okay. If digital is not good, okay. Those are only a few people they can completely lopsided the way and trust that people have in your organization. Now it's very hard to understand what will what what will in the future not work. So maybe in the past, people thought that Google Glass would be very popular, and it was for a little while, but I don't know who still uses Google Glass. If you look at the metaverse, for example, my kids were very enthusiastic about the metaverse, which are social avatars that in an avatar world you just interact with each other, with your social, with your avatar, and then sort of are in a parallel world, then I don't see so often anymore. So but those are more gadgety type of things, I think. So it's hard to predict what will latch on and what will not. I have, I mean, I'm sorry to say so. So I do believe especially blockchain technology is important and is growing in importance for sure. And we've seen big examples of that. I also see crypto in the investment space is becoming very important. It's quite speculative, but it's also becoming a more important investment currency. I don't know yet to what extent crypto as such. Blockchain, yes. But crypto coins as such will be there in the payment space. I will need to see that. I'm watching it. We're experimenting with stablecoin. I'm just not sure yet.
Jilly.
I would say it comes. Everything comes back to trust. You know, there may be many recipes, many ingredients in the recipe of a perfect, financial system. But the one ingredient I think we can all agree on that's essential is trust. So innovations that fail or new technologies that ten years from now look like hype? I would hope that the ones that do do well and survive and go on to thrive are going to be the ones who can really hold on to customer trust. First of all, first and foremost they should be serving also client needs to Stevens Point. So the combination of is something actually fulfilling a basic need or able to fulfill customer needs and customer preferences better than existing alternatives. And is that new development able to attract and very importantly, sustain trust over a lot of different time periods? So that's what that's how we look at innovation from the BMI context. Is it helping the client experience or improving or solving a need that our clients have, and are we able to do it, deliver the product in a way that's going to build on the trust that we've accumulated over hundreds of years?
Yeah. Great.
Yeah. Honestly, I don't know. You know, I think the nature of innovation, technology change is uncertainty, right? How could you sit here and say, well, this is something Caesar is doing, it's not going to work ten years from now, right? I just think horizon so long, I have no idea. So but I do think that, you know, there are, you know, different paths to, brand new finance because finance as sophisticated as complex as the ones that, you know, still a lot of limitations, right? You know, the data, you know, financial services have so much that, you know, and, you know, another bank, ICBC, I was on the board, you know, 1 billion retail customers. Right? So, you know, I haven't been to a, you know, physical brick and mortar branch for ten years, right? It's everything just like, you know, just digital, you know, so, you know, I think we're still at the very beginning, you know, this, you know, the data that we can get, you know, not just structured, but the non-structured data. Right. With the AI model, we're going to get so much intelligence that's going to, you know, risk management, we're talking about, you know, give us much, you know, traditional models where because we're limited by the data set, we can use, you know, the compute power but also the algorithm. So yes, get those insights, but very limited now almost like we can, you know, many, many magnitudes more intelligence in terms of understanding the risk and also management. Right. Customer service you know traditional your core and especially in the US. Right. You make a phone call. It's always like a, you know one hour wait, you know, if you can get it to, you know, whereas now since ten years, you know, like customer service response, you know, so billions, billions of course. So these are real, right? So I think, you know, but still in the early days and, you know, some like any technology change, you know, many would work even, you know, exiting the wildest expectation others will fizzle out. Right. So I think, you know, the market, you know, and customer adoption is the ultimate judge.
Yeah. We need to have you hang out with more Macroeconomists. Macroeconomists will always tell you why nothing is going to work, why everything is a problem. Maybe both would be good for each other. Okay, what should we worry about? Or maybe not place our money on right now?
Sure. I think my three panelists have been very, smooth and politically correct. I'm going to give some more direct answers, which will probably be more put a lot more people, including my own people in my own industry. I do agree with Stephen that I think, look, even if you ask me this question, ten years ago, I would have probably said Bitcoin payments and ten years later we're not quite there. So I'm still skeptical about payments. We're working on it. We as an industry, we're investing in many in many payment projects. But I think any innovation field, like there's always a very high degree of failures. But the small number of successes will be, exponential. Right. I also echo Stephen with what Stephen said about, metaverse. Well, we saw NFTs was pretty hot for a while, but now they're kind of pretty quiet. I have a very strong feeling that memes are probably going to be similar. I could be wrong. I think a lot of people, a lot of crypto guys will hate me for saying this. But, you know, this is a very high risk new areas where the value is highly speculative. Building use cases for those are hard. Some memes do stay like doge. You know, it's been around for like 15 years and it's still have a couple billion dollars of market cap. So there are things that have cultural value that can stay. But I think most memes probably will not last that long. And then I also want to add to offend the other industries, I think brick and mortar banks will decrease significantly over the next ten years.
So decrease.
Decrease, decrease. People will have much less need to go to a physical bank. I think ING pioneered, online banking and that was like 20, 20.
Years.
Ago, 25 years ago. So it takes a long time to replace the old industry. But, now we have cryptocurrencies where blockchain, the need for going to a physical bank to do stuff. Now we have KYC, we have everything. So the need to go to a physical bank may decrease. I don't think banks will disappear. They serve a very important purpose. Well many important purposes. But all of these industries, even new ones, traditional ones, they all have risks. So we should just look at the space, our periodic careful basis.
But do you want to tell us what has failed over the last ten years? You haven't told us what will fail ten years from now. Well.
Basically saying like, look, memes are high risk. Fiscal banks are high risk. Yeah, I can go on, but then I'll offend more people.
Yeah.
But physical.
Banking.
Is not innovation, though. That's like a 17th century, right?
No. I think your last point is really important. I want to push on the banks. If you put some macro economists in this discussion, they would really be focused on the risks to banks as finance flows through other channels, through other mechanisms, banks are critical source of financing for investment and growth in especially small companies and especially in Europe, but with mixed significance around the world. But so if some of these new forms of finance take off, the role of banks could decrease, they could have less funds. Funds will be channeled through other mechanisms. So I particularly want to hear from Stephen and Jamie. You're more closely linked to the traditional banks, although you are innovating and you know the new space too. So, but how concerned are you about the traditional role of banks? Are we going to be looking at very different banking systems in ten years?
Yes. Are you?
Well, I would say.
That, you know, at one point, paper checks were the most novel thing, right? And, if banks only ever focus on paper checks and didn't innovate beyond them, then, you know, those those folks probably aren't really around anymore. And so innovation is absolutely part of the part. It is the name of the game. So and it doesn't have to be just digital technologies. It could be financial instruments, it could be ways for retail and institutional clients to access, you know, asset classes that they previously haven't really been, super familiar with. These are all innovations and doing innovation. I keep on repeating myself. But really, you know, deploying innovation in a way with responsibility and safety in mind, I think is going to be super important. So it's really up to financial institutions, large and small, older and newer, to figure out how do they innovate responsibly, responsibly innovate with client centricity, client trust at the very heart of the why that they are innovating. And I think if you do that and that's the ethos with which B and Y is approaching innovation, I think the future is bright.
Thank you. Anything else? Just very optimistic. Way to.
Summarize what I constantly just I have to agree with it now.
Okay.
But well I think the key word is trust. So that you said and so we have the banks have high trust with customers. And I think that's what we need to bank on. And then it's all about continuously looking at disruptive technologies and see what we can do with it. And so we have had a big fintech era and some of the technologies were very useful. Some of them were not so useful. So it's not or it can be. And and so some of the things that we develop, we develop ourselves sometimes fintechs because they're more in an isolated environment, they can develop a very specific tool that we then use later. And we invested also in a number of more blockchain based payment systems, such as fidelity, for example, or Eclat. And so, currently we have started together with a number of other banks in Europe, a stablecoin initiative called Guevaras. So it's all about continuously looking at what's happening in the world. How can we apply it to the customer? How can we maintain the trust? And in the past, those were these these brick and mortar banks where we and we started for a large extent as a telephone bank and said, wow, if we designed a telephone bank, why don't we then export that somewhere else and then make it to a digital bank? And then it became a computer, it became a tablet, and then it became a mobile. And now you see different means of payments. With blockchain technology. I think it's a natural progression to continuously innovate. In that sense. I think that pressure from the outside world, including regulation, helps us because it forces us to get better, and that's why we can continue to innovate. I'm not concerned, and I'm actually very happy to collaborate with all these new technologies.
Yeah. Let me keep going on some risks. Another big risk that Macroeconomists financial experts focus on is risk to financial markets. Everything can now be done much faster. As at a session last week on some of the risks of algo trading in AI and financial markets. Now, think again, things can happen much faster. I think for me, also, a wake up call was even before many of these innovations you're talking about came into play. Looking at what happened with SVB, and what happened with SVB, we saw a bank collapse much faster than we have seen before. Compared to, say, 2008 peak of the global financial crisis, biggest two bank collapses in the US. WaMu were the two biggest ones in the US that collapsed. Then it took about 2 to 3 weeks to really see the run hit them, where they had to declare bankruptcy. In that run that took 2 to 3 weeks, only took out about 10 to 15% of their deposits, then SVB 1 to 2 days. They lost about 80 to 90% of their deposits. So things just happen much faster. And that wasn't even a story of AI or Bitcoin or some of these new technologies. This was just the new developments that people can chat online. They don't have to all go to the coffee shop and exchange news and rumors. And it was the new technology that people can withdraw from their accounts online instead of having to go wait in line. So in some sense, that's old fashioned technology compared to the things you're all talking about. Yet that has fundamentally changed how quickly bank runs happen. And then when you think about the implications for financial markets more broadly, you have more momentum trading. If everyone is trading on the same algorithm, and AI is doing it so humans don't even have time to push a button, you know, things can prices can move much more quickly. You're going to get more herding, more volatility, whole set of risks. Is this how much should we worry about that? What? Is there anything that can be done?
You know, look, this is why.
Proactive risk management, risk detection. You got to start with that real time detection. Because without that then the risk mitigation actions won't necessarily kick in in time. So that's one. Two is this is why, you know, things like T plus one settlement real time payments, central clearing of U.S. government securities. Those are market structure developments, innovations in a way that B and Y is very much helping all our clients around the world, execute and and onboard and reduction of things like settlement, times the greater ability for asset owners and asset holders to do things like collateral management, knowing where their collateral is, knowing the value and being able to move the collateral, in a more real time fashion. Those are all very tangible. Available now. Mechanisms to improve risk management. And, you know, I should probably also add that us as financial system participants, we're not in the business of predicting exactly what's going to happen, how, when and to whom. We're in the business of preparing for and planning for a variety of different risk management scenarios. You're right, Christine, the magnitude and the complexity of the landscape has changed. It all continues to change. That's sort of the one certainty, right. So this is where, again, just going back to real time settlements, or more, faster, speedier settlements, the ability to do, you know, proactive and more real time risk detection and actually interconnectedness of the financial ecosystem. These are all positive attributes in the long game of risk management.
Yeah, I think to add so so indeed, I think the digitalization has helped the speed the lowering of transaction costs. But also better risk management. In for example, using blockchain technology, because of distributed networks and therefore, it has it has partially made the banking world safer and the finance world safer, on the other hand. And that's the interconnectedness part of it, if the supply chains and the banking systems and the digital networks are all so connected, that means that the proliferation of when something happens gets enormous. And that means that, let's say, real time monitoring, compartmentalization of networks, differentiation of cloud systems, are becoming much more important in the past because in the past, when something happened, it was limited to what happened in a particular branch, and we could contain it. Now it gets all over the place. And I think that's why looking at risk management and being much more proactive in it and looking at trading patterns or information patterns to see what is happening is much more important now. What then was in the past? And that's where technology can also help us. Yeah.
That's a good point. So do you want to jump in?
No I think this is certainly a double edged sword. Right. So you know, AI could enhance the, you know, risk management capabilities. But also now there's, like the AI enabled fraud, right? So it's kind of like a chicken, not like a mess and the cat kind of game. I think, you know, but the question eluded kind of systemic risk, like, you know, because of the speed, because of the concentration of certain model or algorithm. Right. You know, that may cause synchronized trading behavior. More like a amplification of human herd behavior in, you know, in the AI era. So that's kind of unknown, but it's well, kind of know that we know that there's, you know, in with shocks where the currency or, you know, bank around or maybe geopolitical events, you know, something happening in Greenland, for example, you know, so definitely the speed of transmission of, you know, from one, say, from, currency interest rates to like, equity and, you know, other fixed income markets. Right. Or commodity futures that could be much faster. And, you know, so it's kind of unknown. So but, you know, in the new era of AI, in finance, that's the, you know, displace the role of central bank and, you know, FSB global cooperation. And also, you know, these are also for regulators and macroprudential, you know, policymakers, you know, yourself used to be in the government. You know, I also need to step up the game, right, to use AI as kind of early warning system. Right? You know, to, to detect the emerging risks. So, so get prepared. Right. So I think, you know, it's unknown, but I'm not as, pessimistic just because AI that, you know, we are going to lose control, in terms of systemic financial stability going forward.
Yeah, I have a couple of points to add to that. I think I can dissect that into a couple of different separate points. I think number one is if everything else stays equal, being faster and cheaper is always better. That itself does not create more risk. What's the risk there is it's just faster will make it appear faster to happen. But if a bank or banks are fractional reserves. So if the bank doesn't have enough money just because people can withdraw money faster, that's just going to expose the problem faster. But making it slower doesn't solve that problem, it just makes it just means more consumers couldn't withdraw when they want to withdraw, so they're stuck. That doesn't solve any problems. So if everything else stays the same, technology that makes things cheaper faster is always better. On the Silicon Valley bank, when you described the question, in the crypto industry, we have a different kind of, rumors or feel to it. The bank may or may not be in trouble, but our impression is the bank is very crypto friendly. It may have been shut down by Operation Choke .2.0 back in 2023. I also give another example that happened to Binance, in December 2023. This is after the FTX went down, after Luna, UST after silicon. This is Silicon Valley Bank actually, in in in one day there was maximum withdrawal of 7 billion USD equivalent of assets from Binance.com. No issues in that week. There was a few days before that it was like 100 couple hundred million, a billion, a billion and then 7 billion and then a billion, 1,000,000,000 billion in that week, total 14 billion USD worth of assets got withdrawn from the platform. No issues in a bank. I don't I don't know of any bank that can handle that. So when the term bank run, it is mainly because the design of banks are fractional reserves. When you have a fractional reserve system, then you have this liquidity issue. So, that comes down to the systematic design of the system. Not so much AI. You know, so that's kind of my view. Yeah. The AI does have the problem of synchronized action potentially, but I think that's a very small we're looking at a very small thing to blame the entire problem on my view.
Okay. So I got some some different ideas. So what was going to model is settlements risk management and also regulation including reserve reserve requirements things like that. So some of this has to be done within each company. But there is also a role for government in government regulation and all this and government infrastructure in the country. And this is where we are very lucky to have a rich panel where people who all of you operate internationally, you operate around the world, but you each are at least based or your company is based in different countries. We have the Netherlands, the US, China and UAE. So could each of you talk about how important is the regulatory framework? I'm going to start with you, Fred. In particular, different countries are taking some different approaches to how they manage some of these different risks. And Fred in particular, could you talk about China in the US or taking some different approaches? How does the approach of the government affect opportunities in each of these countries? And then I'll open it up to the rest of you.
Yeah. First of all, China is, you know, member of IMF and, you know, and, you know, FSB. So China actually adopts and embrace and stick to all the global, you know, rules in terms of financial, you know, stability and, you know, prudential regulation, and consumer protection. But further than that, I think China is still, I would say very because of tradition, you know, the political system is still, I would say more strict, you know, strict, and the more, you know, tighter kind of regulation. Not in terms of systemic, stability, but also in terms of conduct, you know, behavior, even products, specific products, you know, all need kind of approval, by central bank and regulators, like all the security. So generally, the financial regulation, China is, stricter, you know, tighter than us is still quintessential capitalist. You know, they are always good regulations, but generally give market participants financial institutions a lot more leeway, a lot more autonomy. So so China is very strict. Yeah. Okay. But that's the price though, is that even with that very strict regulatory framework and philosophy tradition, you know, it's still quite amazing. You know, in many ways China is also on the forefront of innovation, you know, particularly the fintech. Yeah.
Yeah. Actually let me angle that. Steven, you mentioned this important issue of cross-border spillovers. We saw that in the banking crises, just a bank somewhere based in another country. It can affect your country and you may not be able to bail it out or support it. So given some of these spillover risks, which you highlighted, do we need some sort of global regulator for some of these issues?
I would support that.
Yeah okay.
So so no, look, I mean we are present in, in 35 countries on the ground. So, large parts of Europe and in the US and in Asia as well. So differences in regulation. Well, let me put it this way. First of all, if you have the same activities, it would help for societies if you then also have the same regulation. So activity based regulation will help. That is currently not the case everywhere. It is improving but not the case everywhere. And that also means that in other financial institutions, not necessarily banks should then become part of that activity based regulation. Because if you employ the same activity and generate, interaction with customers, that should apply for the same regulation. When we talk about Europe also there, you do see that regulation is not completely harmonized and integrated, and therefore you have some, gold plating in several countries, depending on what they see happening and how they want to look at their own banking sector in their particular market. And it is not confined towards borders. But, you know, the whole story about Europe, we need to become one. Secondly. But there are also good things. If I look at Mcaa, for example, which is the crypto regulation that is enabling blockchain technologies now to become more part of banking, and therefore it is becoming part of the technology stack that we now have in terms of the interaction and the digital way of doing transactions with our clients. So I think that is good, because that then provides an umbrella under which, people can act. When I talk about the AI act again, that's a different side of the coin. If you look at the US, AI is very much focused on opportunities and innovation. If we look at the AI act in Europe, it's very much focused on risk management. And there's nothing wrong with risk management. I think it's very good. We should keep the system safe. But if the AI act only talks about risk management, but not about strategic positioning, that Europe wants to take an AI, we have it's reversed. We should start with how do we want to position ourselves and then and how do we protect ourselves. And I think that's a different approach that people take in different parts of the organization. And that's what we should change. And maybe last but not least, looking at investments. And that's a particular hobbyhorse of mine. In Europe, the mantra has always been also because of the construct of societies, we have big pension funds, employers and employees will contribute to the pension funds and therefore the pension funds will invest. You see, changing societies and changing demographics of society. So the number of workers in the markets is decreasing and means that the pension systems from the past can't hold up anymore. And that means that people need to continue to think about how do I invest for the future, for myself, for my children, for my family, for colleagues, etc.? And so therefore, the responsibility put on the individual to invest for the future becomes more and more important. And in that regard, Europe needs to stimulate investments beyond savings much more. In Europe we have a GDP of about 16 trillion, 12 trillion of that sits in deposits with the banks. Now, I'm happy with the deposits sitting in the bank, but they don't really work and I want them to put them to work. And that's the mindshift shift that we need to have in Europe to get more people to invest for the future.
Yeah, that's a nice thing to this broader theme of Davos geopolitics, if you want to be a powerful country in this world of changing geopolitics, having efficient financial sector, efficient investment is going to be key. Yeah, yeah. Anything else to either of you want to jump in on this. And then I'll open it up to the.
The only thing I would add is that regulation has to be a force for good, for economic growth, market access and innovation. And when that happens, regulation actually helps to breed adoption. It helps to actually encourage participation and adds to the trust that the, you know, other sort of participants actually have in the underlying financial ecosystem. And I would say that some of the, you know, the regulatory simplification that we've seen in different parts of the world, I think is really, you know, aimed towards fulfilling that objective of really balancing, you know, the sort of the undertaking of being regulated and so on and so forth with what's actually good for business, what's actually good for market access, and continued faith and trust in the system.
Thank you. Susie. Any quick?
Yeah, I have a different I have a different perspective on this issue because we're sitting in a different industry. It feels to me personally, like the banking industry, the securities industry, the regulators are highly developed, highly mature, and they are highly similar across countries. I know there are differences. This is probably a novice person looking at a problem in a very simplistic way. Whereas for crypto regulation it's different, very different in every country right now. And to be honest, well, Binance has like what, 22, 23 licenses all around the world, but the majority of countries don't have licensing regimes today in the world. And we also see us is progressing very quickly. But it's in progress. Right. So the market structure, the clarity bill, the market structure, Bill, the genius was passed last year. So like 6 or 7 months ago. So this is an in progress thing. We also see many other countries, you know, UAE has adopted a fairly forward regulations. Bahrain, Pakistan, Kenya, we kind of we're we're glad to be in the consultation process together with them. So they at least talk to industry players. I'm a personal advisor to some of these governments. Even though I'm not a crypto, I'm not a regulation expert, but I just tell them from a market market perspective. Also, in this process, some there are some key differences in countries policies, especially when it comes to capital controls. Many countries, when you take money out of the country, that's a they have a limit above that limit that becomes money laundering or basically illegal. However you call it. US doesn't have this issue. It doesn't have this control. Taxes are very different in every country. So this kind of, affects financial regulations because, you know, especially if if you buy Bitcoin, the price goes up. Do you pay tax or not on the unrealized gain or realized gain or whatever. Right. So we think that, obviously more clarity, more consistency will be much, much better. But I don't think a global regulator will work. Well, it's possible at this moment, different countries have different priorities, different agendas, different, considerations. So a global regulator would be quite difficult. We would love to see it, especially if that global regulator can put in positive regulatory framework that's relatively, relatively pro-innovation. And that will make the industry players job a lot easier. But to be honest, logically it should be like that, right? Because crypto is the same in every country. It doesn't change country from country to country. So there should be an optimum framework that we should be able to put in. So I'm actually working, spending a lot of my time trying to figure out what that is and how to work with different countries.
That's great to hear. I agree, right now is probably not the time to launch a new global international organization, a new global regulatory framework. That's a big uphill battle. But that doesn't mean we shouldn't start thinking about what it would look like if the opportunity does arrive, especially if we have some sort of crisis, some sort of major financial meltdown, we might want to have some ideas and plans ready to go to put something in place.
What might be easier is a regulatory passporting like, once you get a license in one country, a number of other countries recognize that, and that just requires the regulators in different countries to to have some kind of agreement. We've seen some discussions of that already. I think that step most likely will happen first, and making a new regulatory body or even a forum, is making a global.
Questions, but please feel free to grab any of the panelists if you did have any questions. But I think that's a great way to end this sort of merger between all this exciting innovation happening. There is a role for probably some regulation, global coordination, but let's not be too ambitious right now. And I think your proposal is a great path to think about going forward. So I've been asked to summarize this session. We're out of time and it's impossible to summarize all this, but I will just summarize. It was one sentence. What I took from this is AI is part of the exciting opportunity ahead in finance. AI is also going to present some substantial risks in finance, including for banks, just financial markets. Overall innovation is part of the solution. But again AI, it could be part of the solution in managing some of these risks. So I think very exciting opportunities, risks going forward. And AI is at the core of all of them. So thank you very much.
Thank you.