Celebrating 30 years of GFF Summit

Join us for a special, extended episode featuring interviews with keynote speakers, experts and leaders from this year's 30th anniversary GFF Summit and the Central Bank and Sovereign Wealth Fund Forum. We review recent updates from the ECB regarding DLT collateral, examining their impact on the markets, tokenization, stablecoins, and digital payment systems. Additionally, we discuss the EU's economic achievements and the increasing significance of the euro as a global reserve currency. 

Listeners will gain expert perspectives on current trends in finance and technology, including regulatory updates and market innovations. Featuring insights from leaders at ESM, Atlantic Council, Deutsche Börse, Clearstream, Coinbase, Circle, Eurex, ICMA, and Vermeg—including Kalin Anev Janse, James Fok, and Coralie Billman—this episode brings together top voices in the industry to provide valuable analysis and commentary.

Transcript

SPEAKER_02 0:07

And welcome back to this very special 30th anniversary edition of the GFF podcast. Yes, it's happened. We've had our 30th anniversary event. It was a fantastic uh three days in Luxembourg. Um, we had uh great speakers, huge attendance. Uh the parties were great, the food was great, and I think also uh the the topics were absolutely sizzling hot. Joining me to talk about that, of course, is my co-host, Mr. Christian Rossler. Christian, uh, you organized the Central Bank and Sovereign Wealth Fund Forum Day. How was it for you?

Central Bank Forum And ECB’s DLT Collateral Move

SPEAKER_08 0:42

Yeah, it was it was really a very special event, too. I think we had um more than um 110 people in the room. It was um a you on stage, by the way, as you had uh to interview Karin Bians and uh also um Bastien Buchfalter. I think that um the seminal moment of the central bank forum was when um Imen Almunir Rousseau announced that um the European Central Bank is going to open up their collateral eligibility criteria for uh DLT assets, which was um at the same day announced by the ECB. So that is going to be remembered. And of course, um myself moderating um the event, but also moderating the milestone panel at the end with uh the colleagues from the Deutsche Börse Group. Some of you you've interviewed as well already, you know, the Gathartung, the Marcel Nas, the Fabrice Stomenko, you know, the usual suspects that have been um um shaping uh the funding and financing products at the Deutsche Börse Group for the last uh 30 years and are still shaping the uh digital revolution. So um I can only say um well, top notch and uh well done, all to those guys.

SPEAKER_02 1:59

Yeah, it was a great event, actually. I enjoyed it very much. I interviewed uh the chief financial officer of the uh European stability mechanism, Carlin Anavionsa, as you said, and uh we're gonna hear from him actually in just a second because I grabbed him with my roving mic at the speaker's dinner and uh got a few of his thoughts about the good news story for Europe. Also, the interview with Sebastian Buchwalter was great. Um, a lot of discussion about stable coins and the role that they're gonna play in uh financial market infrastructure. We've got more people talking about stable coins as James Morrick from Coinbase and uh Coralie Billman, who's the European president of Circle Internet, who are building that next generation of settlement systems. It's all coming up in the show, plus, of course, uh our usual uh check-ins with uh thought leaders in the uh securities finance space. And to kick it all off, I managed to catch up at the end of day one with the head of collateral liquidity and lending solutions, uh, Martin Saghetti, someone who's been on this show many times. Marty is also now leading the stable coins initiative for the Deutsche Bursa. So uh the man in the hot seat with all the great answers uh to all the tough questions, and he had this to say.

Stablecoins On The Agenda

SPEAKER_13 3:15

I mean, the timing of this conference couldn't be better, to be honest, right? It's the beginning of the year, and normally this is where the market comes to meet so that they can talk about their trading strategy and generally the strategy for the rest of the year. I think this year the context is a little bit different, right? Because we're dealing with a very different geopolitical and macroeconomic environment. So the emphasis is also different. You know, it's a different thing when you come here and you're in a stable market, you know your counterparties. Broadly speaking, there's not going to be too much disruptions, right? But I think this year people are really considering their networks, they're really considering their counterparties. Trading strategy has a much broader meaning this year. And we actually managed to time it quite well, right? We've reformatted the event to focus much more on keynote speeches, expert sessions, fireside chats, and we've kind of minimized the broad, diverse panels that we relied on last year. And that's that's been very, very well received, right? Lots of super relevant information has been discussed. And even at the end of the day, in the conference center, the energy level was much higher than normal. So I think we kind of hit the nail on the head this year. The feedback I'm getting so far is excellent.

Strategy Shifts In A Tough Macro Year

Founders Of Europe’s Repo Market

SPEAKER_02 4:32

Martin Sagetti there, and we will have more from Marty later in the show when we are talking about stable coins, CBDC, and the future of the digital euro. But before we get to that, let's go back in time. This was an anniversary event, after all, and let's catch up with two men who were instrumental in the creation of the early European repo markets. Uh, we're talking to Gabriel Freddiani and Greg Marquizos, uh, who between them managed to bring together the community who are still meeting 30 years later at the GFF. Let's start with Gabrielle.

SPEAKER_07 5:11

However simple repo is to explain, you know, I give you cash and uh you keep canaccio and then you reverse, the the details are are excruciatingly complicated. So the fact that everybody came through the back office, middle office broken, i.e., you know, I put two people together, but you know, that was the easy part. Finding a rate was almost the easy part. It was all the infrastructure that was needed, the frustration not getting things done. I think that's probably the key thing that that it's also gelled that community together. So when when the the markets or even the world got hit by uh liquidity crisis or or or debt crisis or or opportunities, even electronic trading, but the repo, because it was so uh uh professional in its approach, uh, and when I say professional, professional sense that, you know, not just trading at two and selling at four, but actually knowing the way things worked by necessity and by formation, I think that's probably the key element which a gel and everyone together and then enabled us not only to react very well, but also to counter-attack. Uh and and you know, there was very little friction really, even in the the days of interoperability, intraoperability, bridges, competition. You know, it was it was always a very friendly market. There was room to grow, and and it's grown. That's the key thing.

SPEAKER_11 6:28

It was all of us that did it together because we had to, out of commercial interest, but also out of also some sense of altruism, because we could sense how important, how critical it was. It was a testament to the um incredible work that, you know, the prior two decades, um uh that, you know, what had been achieved, the incredible work that had gone into developing this market in the prior two decades, that it became such a central part uh of the solution mechanisms that were put in place to get us through the financial crisis. And it went on from strength to strength after that, right? It is so witness how integrated it is in everything that the banks do today. Literally everything. Okay. Even in in, you know, in my last job, I had to deal with, you know, the whole of cities, for example, um credit uh businesses, okay, wholesale as well as retail. And I can tell you that even retail businesses have come to rely to some extent to the repo markets. And and and it's you know, coming from a repo background, it was very uh gratifying, but also very interesting to me to see how integrated it is. Um and what I was trying to impart to the the the the the the conference participants that were listening to us that this doesn't stop. Because the market around the repo market, you know, everything else basically doesn't stop, it continues evolving. So for the repo market to remain relevant and to continue serving the purpose that it has so successfully served hitherto, it also has to evolve with it. So they have to stay alert, they have to look at what their peers are doing around the other businesses uh around banks and adapt to them and and and and basically ensure that that they they they keep the product not just relevant but also fit for purpose.

How Repo Became Core Bank Infrastructure

SPEAKER_02 8:12

Gabrielle Freddiani and Greg Marquizos, the two people who were instrumental in the development of the repo market in Europe back in the 1990s, and then who were really at the heart of it for the last 30 years, helping it grow into the thriving business we know today. And someone who's very much still in the hot seat, of course, is Karsten Hiller, the head of repo sales for Europe at URX. And he's been a regular guest on the show. And it was great to catch up with Karsten and get his thoughts on where the repo market is headed today.

Repo Today: Liquidity And Speed At Eurex

SPEAKER_12 8:42

So we heard a lot here at the GFF summit, the 30th anniversary, the place where the market meets, yeah, and about the new technologies, yeah. And you said it um so stablecoin, uh then um DLT um uh transactions and also um intra-day liquidity, intraday repo. But I think this is these are all very interesting projects and developments for the future, but at the moment, the traditional repo business is still functioning and it's a market with huge liquidity, and also we see this in GC pooling. Volumes are growing. Yeah, we see more and more um clients joining um the repo market. Yeah, we have a huge interest from buy-side clients, but also from um public sector institutions, yeah. And um it's great, and the the markets are so liquid, I think that it will take years and a lot of time that there's a transition and the market is moving into these new technologies. Yeah, and you have different proof of concept, different cases, yeah, and um all working for the moment, which is good. Yeah, but as I said, um repo traders they need liquidity, they need fast execution, and uh they need straight through processing, and that's all what you get in our markets, yeah. So at UREX, you have with the GC pooling um where the trade settles within 30 minutes or even uh most of them within 15 minutes, yeah, and um you can trade with one click a couple of billions and raise cash or invest your cash, and at the same time you have then um settlement and also then in GC pooling the collateral allocation and collateral management done by ClearStream. So it's so efficient, yeah. And that is so the thing that yeah, the repo traders they need. Yeah, they need this efficiency and fast execution. So that's why I think it will take still years, yeah, when the market is then moving more into the new technologies and new world.

RMB’s Rise And Bond Market Buildout

SPEAKER_02 10:53

Now, over the last 30 years, a lot has changed around the world. So we're going to be having a catch-up on the geoeconomic outlook for 2026 with regular contributor Charles Litchfield from the Atlantic Council. But before we meet Charles, another keynote speaker I managed to catch up with was James A. Fock, who's the chief commercial officer of the Central Money Markets Unit at the Hong Kong Monetary Authority. And he gave a really interesting talk about the Rimmin Bee, its role as an international currency, and the internationalization of Chinese government bonds. Here's what James had to say.

SPEAKER_04 11:30

Well, first of all, just to clarify, I I don't imagine that the US dollar is going away anywhere anytime soon. But what what I what I am talking about is that the Rem B is increasing in importance. And that's primarily been driven by trade as a start. But following that trade, what's happening is that very naturally Chinese companies, other international parties who are dealing more with Remen B overseas, want to have more flexibility in the way that they deal with Rembi. And particularly, they want to have the liquidity management tools, they want to have the hedging tools and risk management tools in order to be able to do that. And that is what is now being put in place. And you know, as I talked about earlier on, we we've got huge growth potential in there just simply because international investors are so massively underallocated into Remin B. And also Chinese investors are looking to increase their investments offshore. They are natural Remn B investors, and so for international issuers and capital users that want to tap into that pool, Remen B becomes a more important issuance currency.

SPEAKER_02 12:50

Yes. I mean, we were talking uh about the growth of international issuers in Rem B. It's uh now about uh a third, 34%, uh uh was one of the numbers you brought up. Give us an idea of the scale of the opportunity here. I mean, we were talking about 24 trillion uh is held in Chinese domestic deposits. That's the largest capital market opportunity uh that we've we've seen in the world for some time. I mean, this really could be uh uh over the the medium term, a real rebalancing of global reserve currencies and the way that uh currency and uh bonds uh are allocated uh uh to international participants.

SPEAKER_04 13:34

It it is a big opportunity and the the uh Chinese households need to uh put their savings to work for them is uh is a huge factor in in driving the the size of this market. But I think you know that this is uh this is perhaps uh best looked at not just in the the raw numbers of absolute savings amounts, etc., which stand today. And perhaps I can use a different analogy, but you know, we're we're we're we're at the 30th anniversary of this event uh here today. But yeah, I'd like to sort of cast our eyes back a little bit further than 30 years and perhaps try and look at this in the context of where the offshore RemB is today in its stage of development versus the Eurodollar market. And in terms of time, I I would peg where we are in offshore RemB today to about where the Eurodollar was in 1963. You've got an offshore RemB market, you've got an offshore issuance, you've got an offshore bond market, and what we are now looking at is the creation of a repo market and a lending market around RemB securities. And given the leverage effect of that, I think that the market is poised to be something that's considerably bigger than just the household savings numbers that you talked about.

Geoeconomics 2026: Tariffs, Deregulation, Markets

SPEAKER_02 15:14

Okay, so we're here. The GFF has just officially ended, and we're having our final lunch of delicious but tiny food. Uh, and I've managed to catch up with someone you will know very well, of course, uh, Mr. Charles Litchfield, who is the Deputy Director of the Geoeconomic Center and C. Boyden Gray Fellow at the Atlantic Council. Charles, when you came last year, you made a number of predictions, especially about baseline tariffs and uh potential issues with Iran. Many of the audience were skeptical then. Certainly, as all those things have come absolutely true, they're not skeptical now. So, what are your predictions? You had five key areas you talked about in your keynote. Uh five five key areas, five minutes, take us through it.

SPEAKER_14 15:58

Thanks a lot. Uh yes, I mean, people did think I was being a bit alarmist last year, um, saying that the tariffs were definitely coming. And it was interesting to have a little bit of a retrospective with uh your very erudite attendees. One point I tried to make is that yes, Trump does sometimes pull back from uh his most um aggressive policies, but not that often, and even when he does, uh it's some it ends up somewhere halfway. And so we end up with a um average trade-weighted tariff of 16.2%, much higher than what it used to be, and yet the markets are pretty relaxed with it. Now, obviously, um the year 2026 may show higher inflation. That will also definitely come with the depreciated dollar. So maybe the price will be paid a little bit later. But for now, Trump has managed to impose the tariffs. Very few countries have retaliated, and they feel sort of vindicated, and that's not necessarily what attendees would have predicted last year. So it's good to go over that. Um, what else were we looking at? We looked at um geopolitical tensions. Uh, I mentioned Greenland a little bit. I don't think that's over. Um, there's very little information out there about the deal that was brokered in Davos. And I think um there may be a little bit more economic coercion coming down the line, which Europe will have to be ready to deal with. Um and I don't think Europe's response has been completely limp. I mean, they did manage to send soldiers up which gave Trump some pause. But my point yesterday was that just this is not. And then maybe um before I talk about Iran, um, a point about the markets and whether they disciplined Trump or not. It's absolutely true that both times Trump has really pulled back from an aggressive policy on tariffs, whether you had the 90-day deferral and on Greenland, uh, markets uh were reacting in a very well, markets were very alarmed, stock prices went down, bond prices went down, and the dollar depreciated. Those things used not to occur at the same time. So that did give the US administration some pause, but a point I tried to make is that every time the market reaction is a little bit softer. They're sort of pricing in that Trump will um uh step back, but that means that every time, given the response is softer, their ability to discipline Trump uh is also smaller. So that was another other important point I tried to make. Um and then the questions were really good too. There was a question about deregulation, which is absolutely this US administration's agenda for 2026. In 2025, it was about bringing the tariffs up and taxes down. So trying to reassure households a little bit as the tariffs were brought up. In 2026, it's about deregulation. One point I made is that they still have pretty much full control within the US and they will deregulate. But on international regulation, especially financial stability buffers, uh, it will be a little bit more difficult for them to impose a deregulation agenda on everyone else, even if they have the G20 presidency. But one important point is that because the US is so interested in deregulation, there's no appetite anywhere really to add to the pile of regulation. So that whole sort of Basel III framework, a Basel III endgame framework is just not happening now. Um some people will be quite relieved about that. I mean, there are a lot of banks present who felt the Basel III endgame was excessive, especially on the US side. They felt the US was going too far. But now that conversation is dead.

SPEAKER_02 19:08

No, and finally, uh, will there be an opportunity for me to start selling some free Jerome Powell t-shirts at next year's event?

SPEAKER_14 19:16

I think that the uh Fed chair's mandate, uh, given that it ends quite soon, will probably end not entirely smoothly because he is under investigation by the DOJ, but I think he'll make it to the end of his term and then hopefully be left alone. Um I I I jumped too soon.

Europe’s Surprise Outperformance And AI Push

SPEAKER_02 19:34

I shouldn't have had all those t-shirts printed. Um I'm sure you can repurpose them in some way. Well, while we're on the subject of global affairs, as I mentioned with Christian, I had a great chat with Callan Anavianza, uh, the CFO of the European Stability Mechanism at the Sovereign Wealth and uh Central Bank event the day before the main GFF kicked off. And I caught up with Callan to talk about the European success story in capital markets and all the positive trends that are going to take us into 2026.

SPEAKER_10 20:10

So, what is exceptional for last year, 2025, is that European markets really beat US markets. So this is something no one expected. But if you look at equities, uh, the Cacaran in France, the Eurostocks uh 600, the DAX in Germany and Italy especially, they outperformed the Nasdaq and the S B 500. And I think this is really quite exceptional because the narrative has been Europe is doing bad, America is doing great, but if you purely look at equity investment, that is the case. But it goes even further than that. If you look at debt markets, the top economies in the world, uh by the economist, seven out of the top ten are European, and it's headed by Portugal. Uh, and markets love it, so you see a real contraction in spread. So I think the hidden story of 2025 was that actually Europe was the top performer in the world.

SPEAKER_02 21:03

Now, one of the big topics of conversation at this year's GFF is all about digitalization and especially digital currencies and digital tokenization. These are the disruptive vectors that could be changing things for market participants. Now, you've written quite extensively on this. What's your view on the future of digitalization in the securities industry?

Tokenization, Wholesale CBDC, And Savings Mobilization

SPEAKER_10 21:25

So, as uh ESM and for me as CFO, we have been very much pushing for the wholesale uh CDBC, so the wholesale digital euro. And now this year, with uh the ECB working on Pontes and API as new technologies that they want to launch, it's something that we're really supportive to and really want to be part of, both as an investor as an issuer. Um, in the past, we wrote opets about this, we wrote working papers about it and how this should look like. But here I think Europe really can step up its game. That's one area. The other area is artificial intelligence. At the ESM, we have invested a lot in AI. We work With uh the University of Luxembourg because we are now in Luxembourg with three PhDs that are looking at how to optimize capital markets and how to optimize bond markets. So I do believe Europe has a technology and can even boost that further.

SPEAKER_02 22:14

And we've talked a lot about the capital markets union on the show, and then we've talked about the Saving and Investments Union, as it's now called. But actually, there are some developments taking place there that really revolve around technology and means that that might actually deliver within this EU commission.

SPEAKER_10 22:30

So I think what one of the great things about Capital Markets Union, SEMX Investment Union, is that we uh we now see some of the game changers really coming to play. The first one is European safe assets have been growing. So uh 15 years ago we had only 400 million of European bonds out there from the European Investment Bank. Now we are at 1.4 trillion. So it more than tripled in number. And the EFSF, ESM, my bonds are part of that. I think that's one of the game changers. The other game changer is that we are looking at more European harmonization in supervision, on securitization. There are big initiatives on the side of the Commission. And I think what we are trying to do is to bring all these savings. We have more than 10 trillion in savings on bank accounts into the market, in equities, in debt. Uh so that I think is where we have an uh a real European edge.

SPEAKER_02 23:23

You were at Davos giving uh some important talks at the World Economic Forum. A lot of the news was dominated by those sort of headline items uh with uh the American delegation and President Trump. But underneath that, behind those headlines, there was an awful lot more good news coming out, wasn't there, about European cooperation and relationships with Canada. Tell us more about that insider view from Davos.

SPEAKER_10 23:45

Yeah, so the first topic, of course, was geopolitics. Uh, you could not avoid that with everything happening around the world. But the underlying topic was artificial intelligence. So I chair the CFO community of all the CFOs globally uh and at the World Economic Forum. And our discussion was really how are we going to boost AI? So uh the CFO of OpenAI was part of the panel, also of uh one of the data companies. So CFOs two years ago saw it as something new. ChatGDP was just dropped. Today, every CFO is using AI as part of their business or also as an investment. But if you look at the geopolitical story, to come back at the very start, I think the message out of Davos is we need more Europe, more European safety faces, more European integration. I think this is good for Europe, but it's also good for the world, for the US, for Canada, for China, and the rest of other citizenship around the globe.

SPEAKER_02 24:37

And talking of more Europe, there is a fairly good chance, and I know we've worked this out, but I think it's important just to record it for posterity. There's a fairly good chance that Scotland could face Holland in the first knockout stages of the World Cup. What are your predictions there?

SPEAKER_10 24:51

So it's a Dutch person. I'm very proud of the Dutch team. I've been many times to uh to the games, and my son, who is now nine, loves it. Uh so we already were calculating how the Netlands could go up to the final, and I think what would be really great is at the final in the US, if one of the European countries uh wins, and then uh to have the the the World Cup be given to a European country. I think that would be a great achievement. But that's just a football fan myself.

Fixed Income Digitalization: Pragmatism Over Hype

SPEAKER_02 25:18

Well, as Callan mentioned there, the big topics that are emerging are all around stable coins, central bank issued digital currency, digital payment rails, and how traditional finance connects with the new era of digital finance and the tools available there. AI, of course, playing a key role in that. And I want to kick off the tech section of the show by catching up with Georgina Jarrett, who uh is head of fintech and digitalization at the International Capital Market Association. And we were talking about all things digital, uh, starting with the digitalization of the fixed income industry.

SPEAKER_00 25:56

When I came into this job, which was only about three years ago, we we had actually been working on the automation digitalization of the industry for about seven years, which sounds like a long time, but actually in the financial services industry, that is not a long time. So, to your point, I came into financial services as a technologist in 1998, and we were doing, you know, very cool stuff like taking the London Stock Exchange into the electronic era. So we were basically taking everything online. Nowadays, we talk about digital, it was always digital. You know, on the first day that I left university and started coding, that was digital. It was taking manual things and putting them onto technology systems. So what's interesting about the fixed income market is actually it is less digitalized and automated than many of the other asset classes. So if you look at foreign exchange equities, they've been at this for a really, really long time. I mean, the secondary market in fixed income is fairly automated. The primary market really isn't. But if you're a pragmatist, there's a question about that, about whether that's correct, actually. If you think about what the primary market is and does, the size of the deals, the number of the deals, you know, how automated does it need to be?

SPEAKER_02 27:03

And the the theme of the conference this year, obviously, is very heavy focus on how traditional finance and funding bridges the gap to uh DLT and stable coins, especially being a big thing. Now, you're the industry body, so you have an inside view. Uh, what are market participants saying to you? What are your members saying about the prospect of settling through digital rails between private and public blockchains with Mikar regulated stable coins? Are they are they all sticking their head in the sand and saying, no, we don't want to know? Or is there a real appetite for the benefits that could bring?

DLT Adoption Realities Across The Industry

SPEAKER_00 27:42

So I think it depends who you talk to, right? ICMA has around about 640 member firms, and within those member firms around the world trading or doing anything with fixed income. So we've got tech firms, data firms, market infrastructure providers, you know, banks, asset managers, you know, investors, the whole shebang. So the whole network, if you want, it depends who you talk to, right? The thing about technology though is once you create something, you can call it a monster or not, uh, it doesn't go away, right? So if you look at something like DLT, it's been around for a really long time. So we've been actively working on DLT for seven years. Is it flying? Is it everywhere? No. Are there people who are absolute advocates who just believe it's the answer to everything? Yes. One of the early meetings that I went to when I first joined this job, and I really hadn't worked in the bond markets before, was where somebody said, Oh, well, when we put DLT in, we won't need the market infrastructure providers. And my only answer, because I genuinely didn't know whether that was true or not, was look, it's very unlikely by implementing a piece of technology that you will delete an institution with 50, 70, 90 years of doing a job that is absolutely required by the regulators within the network and the industry overnight. You put DLT in, we don't need you anymore. That's not a thing. You know, they weren't even allowed in the DLT working groups in those days, but since then, and that was only three years ago, we've realized that actually that's naive. So there are absolute people who believe this is going to transform the world. And honestly, I am one of them. The question is when? So will we become more digital? Yes. Will we enhance AI? Yes. Will we enhance and adopt DLT? Absolutely. Because once it's here, you can't ignore it. You know, it it we're kind of late in adopting DLT as an industry in terms of financial services. There are other industries that have been using this technology much longer, and it was not generated or developed originally for financial services.

SPEAKER_02 29:36

Well, huge thanks there to Georgina Jarrett from the ICMA. And when it comes to market participants adopting new technologies and moving ahead, uh, two people who know a lot about that, of course, are our next guest, Thomas Wisbach, who leads the D7 project for uh the Deutsche Burse, uh, the hugely successful digitalization digital iterance platform uh that's bringing in all kinds of new digital connectors uh into market infrastructures. And also Wassel Damak, who's the director of product strategy uh Vermeg France for banking and insurance software. Vermeg, of course, you'll remember from an earlier uh episode with Michael Carignano there, uh, talking about the ECMS and connecting together all the public infrastructures around uh central banks within the Eurozone with digital pipes. Uh so let's hear from Thomas and Wassel.

D7 Goes Decentral And ECB Eligibility

SPEAKER_06 30:31

Many people know D7, but they know D7 in a sense that we do business there in a digital way, but focusing on a on a central register issuance. In other words, the CSD does what it usually does is issuing securities into a central register, but in a digital way. This is this was on the menu for for a long time, and now we're extending this. So the next step is really to go as well to use DLT and to use decentral registers to issue securities firstly, to settle securities and do further stuff. So the great news is that we are now going decentral. That's the news.

SPEAKER_02 31:07

And this means you'll be developing that new model, uh, the public-private blockchain, is that right?

SPEAKER_06 31:15

That's a that's a very difficult question. I mean, Andrew, be careful. So we are we are using the technology, the DLT, um uh as a CSD. Uh from a regulatory perspective, we are currently forced to have a private permissioned version of this. Um, meaning that we still control the nodes, that we run the blockchain if you like. But in the longer term, that's uh my conviction, and many people share that, we will go as well beyond this. In other words, we go to more public versions of blockchain where responsibilities are shared, where clients have direct access, maybe where clients even can run a note. This is this is the future to come, not this year, but stay tuned, it will come.

SPEAKER_02 31:59

And finally, are you expecting now the ECB? They just made an announcement two days ago that they are accepting CSD-issued uh DLT collateral uh that's backed uh under certain circumstances. Um, is this going to be a big rush of people coming to the D7 platform? Because you're already way ahead of the game on delivering that kind of collateral.

SPEAKER_06 32:22

This was really great news uh that we had here as well during the conference. So great news for us and in particular for our clients, because what what I hear from clients is that this reusability of securities towards the central bank, towards the ECB, is crucial for them. And now we can get it, and we can get it as a CSD. At the beginning, the ECB will extend that facility later on to other decentrally issued DLT securities, but we can get it right now. From that angle, it will be definitely uh a big rush now. Many people will come because they now see that their securities are marketable, they can be distributed and they can be reused. That's what we need to get to, and that's why it's great news, and I'm happy about it.

Collateral Tech: ECMS, Tokenized MMFs, AI

SPEAKER_05 33:07

Thank you for having me. So it was a busy year uh with the uh ECMS uh go live in June, uh, with all the uh efforts of the uh 20 more central banks together uh coming into a harmonized uh collateral platform across all the uh different central banks. And uh I think it was a very, very interesting uh experience and uh very interesting milestone. Of course, we are here to promote that, but also to promote other solutions about collateral management, about the usage of digital assets in the collateral space, and we have been seeing a lot of discussions about the tokenized market money market funds. Uh, there were also a lot of discussions about the uh usage of new technologies uh like AI within the collateral management space. So I must say excite exciting times, very uh very exciting times, uh good discussions, and uh we are here to help to uh to provide the uh technical tools and the technology uh to uh enable the business.

SPEAKER_02 34:16

Okay, so this is the big tough question. The news just dropped yesterday that the ECB was gonna be accepting a CSD-issued DLT uh collateral. Um now this is huge news with the ECB coming on board. I'm guessing this is gonna have an impact on uh tech providers like the Meg. Uh tell me, how have you had any time to respond to the news yet? Is the team already working all night on it?

SPEAKER_05 34:44

Absolutely, absolutely. I I must say that uh uh you the using uh digital assets in the collateral space has been a hot topic for the last uh six to nine to twelve months. Uh I have clients asking for that, especially uh traditional tokenized money market funds uh to be used as collateral assets. And uh we have been working uh with clients in working groups to see what is the framework for that uh from a legal perspective, from an uh economical perspective as well, and from a technical perspective from what we do. So we have been working on that already uh within our solutions. Uh now the thing is that there is a wider spread, a wider adoption of all that with the last news of uh yesterday, and now of course, uh it's not anymore an option, it's a must. Uh assets, traditional assets and digital assets will be will coexist and will be used as collateral assets, and that's something that will uh stay in the next years.

Stablecoins In FMI: Coinbase’s 24/7 Vision

SPEAKER_02 35:50

Okay, well, now we're coming to the final section of the show, which is talk all about stable coins and their impact in financial market infrastructure and of course, central bank issued currency on the horizon as well. And we're gonna start with uh a new voice on the show, James Morrick, who's the co-head of institutional sales for Amir and APAC at Coinbase. And we dived in and started talking with James, who's been to the GFF many times as a uh money market tokenization uh expert at BlackRock. And now he's moved to Coinbase to tell us how the next generation of services are evolving.

SPEAKER_03 36:27

I've been to this conference for many years and been talking about tokenized money funds or utilizing, try and mobilizing that as a form of collateral, and they're not a transferable security, and tokenizing a fund like that really enabled that. And that really got me starting to think about uh, you know, more assets in that space and crypto, and so that led me to sort of join Coinbase. And so, from a Coinbase perspective, you know, we can see this happening 24-7 today, right? So I just want to be clear like we have a uh a financing team that are lending and borrowing, there's margining clients on a Sunday and they're deploying assets to us to top that up. We're we're we're sending them margin back so we can see what the future uh holds, but we have all this legacy banking system that we need to try and improve on. And so we're starting to see real nice green shoots around uh counterpart banks and counterparties looking at permission blockchains and how they can uh how they can integrate their private chains into those permission blockchains to provide a more sort of seamless and uh effective um uh settlement layer for for securities and crypto securities and stable coins.

SPEAKER_02 37:38

Coinbase is really at the leading edge of the legit institutional world's uh uh crypto connect. It's not like you're some far-flung uh exchange uh that's getting chased down by the New York Attorney General. Um, what's next for Coinbase? Because it seems like you're powering from Strikes to Strengths, and you're increasingly offering more uh B2C options and B2B, and I believe as well, B2B to C, which is a new one I've heard uh at this conference. What's life looking like at Coinbase uh over the next year? What are we gonna be talking about in the next GFF?

Circle On MiCA And Real-World Use Cases

SPEAKER_03 38:15

So I think we made some big announcements last week, uh last month, sorry, uh, around tokenized uh equities that we've uh started to offer to retail clients in the US. We talked about prediction markets uh and we've really talked about the everything exchange. And so we're gonna be making that global. So I think next year we'll be talking about more of that product infrastructure that's making its way across the pond. Um, from an institutional perspective, we want everyone to be signing into one platform to have full cross-collateral capabilities, to be able to access options, um, perped futures, listed futures, spot. Uh, and that's what our main objective is this year, to combine all of those platforms that we have into one unified uh single entity that you can trade whatever you want 24-7 um uh with with with a multitude of collaterals. So I think um that's that's that's where we're we're heading. That's the North Star goal. But we have real high ambitions to be doing that uh in the next few quarters. So I think looking forward to showcasing that next year when I'm back at GFF.

SPEAKER_02 39:19

So joining James in the conversation about how traditional finance connects up with the new digital finance system, stable coins and digital payment rails was Coralie Billman, the president in Europe of Circle Internet. And Coralie explained to us the opportunity, uh the work that she's doing at Circle and how she sees uh the markets developing with Mika-regulated stable coins.

SPEAKER_01 39:48

Yeah, we basically um created um a way to send money, um, transfer money at the speed of the internet. And this is changing the world, this is changing the way we all pay or receive money and work as well, because it's impact our um corporate treasurers, it impacts our uh institutional um basically companies. So this is a kind of a money revolution.

SPEAKER_02 40:16

Now, you talked about the sort of initial use case of stable coins, which was uh, you know, you sell some Bitcoin, you hedge into stable coins for the weekend, then you come back and you transfer frictionlessly back into Bitcoin to have the exposure again and the potential growth there. But you've also outlined four other scenarios that then take the power and the frictionless nature of stable coins through to financial institutions and wholesale banking. Tell us a bit more about those. What are the sort of four points that come uh that will get stable coins into the wholesale world?

Implementation Era: Digital Money And Interoperability

SPEAKER_01 40:53

Thank you. Yeah, it's definitely uh first the corporate treasurers have a lot of interest to use stable coins. It allows them to send money to other entities of their group easily, frictionless. It allows them to send money cross-border, it allows them to um have more time for yield. So do not let the cash stay and sleep uh for a couple of days, so generate more yield. So corporate treasure is definitely an interesting uh point. Second, send money cross-borders for everyone. You want to send money to some family outside of the Eurozone, it's going to take some time and potentially be very expensive. So easy with the stable coin. Then you have all these asset management um infrastructure where we definitely would see the value of uh using stable coins to enter and exit tokenized assets. And tokenized assets are the present. And you think about tokenized money market funds, tokenized securities, tokenized real-world assets. So this is um this is also a very interesting point uh to use stablecoin for this one. Then you have the retail world where we can live with um, I would say, a digital wallet. So pay for um the day-to-day expenses, receive uh inflows, receive uh potentially salary in stablecoin, pay the rent in stablecoin. So the retail world can also benefit from being uh stablecoin users. And what we did with Mika um is tremendous. We were the first one. So for an issuer of stablecoin, being Mika compliant was already enforced as of 1st of July 2024. Genius, I don't want to oppose Genius and Mika. Genius is late in the game, it's not even uh enforced yet. So with Mika, Europe was number one to establish a framework, uh regulatory framework for stable coins in Europe. And not only for stable coins, for all the participants on this market. So we think about exchanges. For example, in 1st of July this year, it's going to be the end of the grandfathering period for the CASP, so crypto asset service providers who are basically distributing stable coins or selling stable coins. So they also need um to get their license by uh mid 2026 for some countries. So Mega in Europe was the first one to establish this robust framework. And this helps to drive the adoption. This helps to build in and to put the standard they are for um all this framework to basically bring trust and confidence in the market for all the participants, banks included.

SPEAKER_02 43:55

Huge thanks to James Morick from Coinbase and Coralie Billman, the the U.S. European president of Circle Internet. Now it seems fitting that we end the show with uh the same man we began it, Martin Sagetti. Marty, of course, is head of collateral liquidity and lending solutions. He's also uh the leader at ClearStream on their stablecoin project and working at board level to integrate ClearStream stablecoin activity with the other members of the Deutsche Bossa. Marty gave us his insights into the world of stablecoins, digital payment rails, central bank issue digital currency, and of course, the best party in the banking calendar, the GFF Gala. So without further ado, let's catch up with Marty.

Closing Reflections And Where To Follow

SPEAKER_13 44:38

I don't know if you noticed, right, but there was actually a little subtle shift in how the digital discussions went this year. They're much more about practical issues than they are about big, big sky thinking, blue sky thinking, big dreams about how we can do things. People are talking about how to manage reserve funds. They're talking about actual liquidity in these instruments. They're talking about how to implement them, how to custody them, how to use them in repo financing transactions. And that's quite a shift, right? That means it's real, it's happening now. People are doing implementation. They're no longer strategizing about how this might change the industry. Now we're in implementation, right? There was a very interesting question on a panel, obviously, Chatham House rule. I'm not going to say which panel or who asked it. When do we see an impact? And the answers were between one to five years. This is no longer a five to ten year thing. This is happening now. That reflects a lot what we're doing as well within the ClearStream environment, right? Um, we have the the digital CSD, which has been launched, but also now we've embraced digital money as a topic that's been managed at the board level of Deutsche Borser, right? I'm leading digital money for ClearStream. And as a result, with colleagues uh in the digital space, we're looking at third-party stable coins as well as our own interpretive interpretation of digital money. And these also are very, very practical discussions, right? And they're discussions around how they can be used in settlement, how they can be used in in collateral management, and also the business case and use cases around these are much firmer than what they've been before. So we are rolling these out as a practical matter, not a single point use case. It's stated in our 2026 onward for the next three years, Deutsche Warza Group strategy that we will convert ourselves into a hybrid FMI, hybrid real-world asset digital fmi. So this is the implementation path that that takes, right? The announcement from the ECB to accept, and it's quite specific, right? They're accepting CSD issued DLT-based digital assets as eligible collateral within the ECB. And that's obviously enormous news for us, right? Our D7 DLT platform is the engine through which we will issue DLT-based digital Euro bonds this year. So by March, when it goes live, we will be operationally ready to leverage the ECB's DLT-based collateral uh collateral system, which I think will be fairly unique in the market.

SPEAKER_02 47:14

Now, one question that has been bubbling under here is with all this great innovation comes the one risk that is keeping people up at night, and that is all the payment rails potentially diverge into a much more complex and fragmented settlement system. Now, I'm guessing uh as you work at one of the major infrastructure providers, it's your job to try and fix that problem if it occurs. So, what's your view?

SPEAKER_13 47:42

I think that there's there's not much you can do, right? Um I believe it's it's uh it's overly simplistic to assume that digital will somehow represent a more automated version of real-world assets, right? And that applies to money. We have a very well-defined money system in the European Union where we have a separation between wholesale and central bank money, right? It's a fairly simple two-tier structure. When we move into digital money, it's gonna be a multi-tier structure, right? There's gonna be digital retail money, right? There's gonna be digital central bank money, and there's gonna be different kinds of wholesale digital currency, including stable coins, that will develop, right? They will have their payment rails based on who uses them and why they use them. Our strategic approach is to be open architecture and to embrace these uh, I guess, payment mechanisms or different rails or different layer one protocols or whatever you want to think about it, into our core digital CSD, that we are interoperable because that's our job. Our job is to provide a platform to the market. We don't think that there's going to be a digital winner, we think that the digital ecosystem will grow and develop in its own way, and we want to be available as that grows and develops across different use cases on different platforms.

SPEAKER_02 49:05

And we got a great party coming up tonight, uh, where this will be discussed, I'm sure, at length uh and more. And I mean, what's next? You've got a big year ahead. Um, there is on the horizon rumors that the digital euro might arrive in some form by my birthday in September. That's the September the 9th, if you're listening, any anyone who wants to send a card in. Um can we can you predict with your C uh collateral liquidity and lending solution crystal ball? Can you predict uh will we get the digital euro this year? No pressure.

SPEAKER_13 49:38

If I was to if I was to guess, I would say probably not this year, but probably very shortly after. However, I think the the the European the the well the ECB and the the the Europe the Euro system has changed its attitude towards digital currency somewhat, right? It used to be all in central bank digital currency, and that is now broadening into stable coins and other forms of digital money. So we will get a central bank digital euro, maybe this year, maybe shortly afterwards, not much longer than that. But we are gonna see a proliferation of Euro-based digital money appearing during the course of this year, including within the Deutsche Borser environment.

SPEAKER_02 50:26

Okay, Marty, listen, I will let you go to the uh networking session now, which is in full swing. And I can see that as soon as you get out there, you're gonna get mobs. So if I were you, I'd stick a glass of champagne in your pocket as a spare and uh have a great night. Thank you for having us along here live. And thanks very much, Martin Sagetti, head of collateral liquidity and lending solutions, host of the GFF.

SPEAKER_13 50:49

Thank you, Andrew. Much appreciated. Have fun tonight.

SPEAKER_02 50:55

Well, that is it. That's the end of this very special 30th anniversary edition of the GFF podcast. And we have had voices from the last 30 years from the men who were responsible for building the repo markets back in the day and steering Europe through the financial crisis, right the way through to the men and women of the industry who are now building the uh wholesale banking infrastructure of the future, the digital issuers, the DLT settlers, the stablecoin pioneers. Yes, you've heard them all here on the show. And I guess all that remains is for me. Say goodbye from me, Andrew Keith Walker. Uh, and we will see you on the next GFF because one thing we know for certain, this industry doesn't stay still for a minute. And also, huge thank you from my co-host, Mr. Christian Rossler.

SPEAKER_09 51:41

Yes, thank you for um this uh incredible um GFF summit, which was a great uh 30 year anniversary and uh looking forward to celebrate um another 30 going forward. So um thank you very much and um see you again soon on the next podcast.

SPEAKER_02 51:59

Yes, we will see you in 30 years. No, we're out in the next month. Do check out in the meantime uh our LinkedIn page. That is linkedin.com slash company slash clear stream, where you will find loads of fascinating content, uh papers uh and reports from everyone who was there at the GFF Summit. Follow the hashtag, hashtag GFF Summit, as well to find lots of pics and videos and commentary about the big topics that are being discussed. And we will see you on the next show. And in the meantime, from all of us here uh in the virtual studio from ClearStream and from the GFF crew. Bye bye. Bye.