VC 20 with Mark Carney, Ex-Governer of the Bank of England

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Key Takeaways

  • Advice – Plan for failure. The market can stay wrong longer than you can stay solvent
  • We’re entering a period where interest rates are going to rise in fiat which may create a pullback. The winners will survive.
  • Carney expects Central Bank Digital Currencies (CBDCs) at the wholesale level. At the retail level will be digital wallet providers. Fintechs will compete to capture market share.
  • The ultimate unit of account and store of value will be in the local fiat, but the fiat won’t necessarily be used as the means of payment.

Intro

Governments, Central Banks, Crypto, and Regulation

  • Private monetary innovations eventually reconnect to the center. Much of defi reconnects back to the formal system. Both need the underpinning of the “safest asset” which is central bank money.
  • There are many innovations in this “boom” cycle. Innovations that bridge a gap in the system will survive.
  • Bitcoin- It has value because others see that it could have value. If bitcoin is to be used as a payment system, there must be a way to get liquidity against it.
  • The more successful a cryptocurrency is, the more it will need to be implemented in the system, perhaps linked with a stable coin to the fiat currency.
  • When a payment system comes to scale, governments will need to provide regulation. It’s in everybody’s interest that that system is resilient, efficient, and well-grounded. 
  • Govts and institutions can benefit from this new tech. Smart contracts and NFTs linked back to a CBDC in the center
  • Carney is NOT a fan of financial transaction taxes. Citizens have a responsibility to pay capital gains
  • A minority of the legacy institutions will survive and there will be a number of new incumbents.

NFTs

  • History shows that tech innovation increases income inequality before it decreases to benefit as many people as possible.
  • Big tech innovations require institutional restructure.
  • NFTs enable new ways for creators to capture value, which is a net benefit.
  • The fractionalization of hard assets allows for new portfolio construction. Such as owning a piece of art or a building.

Quick Takes

  • AI will create more jobs.
  • Top 3 traits he wants for his kids – empathetic, curiosity, and perseverance
  • Long-term interest rates will rise throughout this decade
  • Favorite book – Arcadia by Tom Stoppard

20VC with Harry Stebbings : , , , ,
Notes By Paul Keating

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