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Recognizing the power of innovation to drive sustainable economic value, Thomson Reuters has a long history of seeking its source, tracking its course and examining its evolution; through a unique lens of proprietary databases, analysis and expertise, exploring innovation and where it will lead us in the future.

On November 12 in New York, Thomson Reuters gathered some of the industry’s most creative thinkers in an intriguing debate about what’s in store for the future of money and the disruptive innovations making this happen. The lively discussion: The Future of Money: Cashing Out on Cash, was the sixth event from Thomson Reuters in a series honoring innovation, which also included the launch of the annual list of Thomson Reuters Top 100 Global Innovators. The event also honored regional innovation in the San Francisco Bay Area for the first time, given its alias as the tech hub of the world.

The discussion was led by Rob Cox, editor of Thomson Reuters Breakingviews, and included Luan Cox, CEO of Crowdnetic, Nathaniel Popper, author of Digital Gold, Sam Shrauger, SVP of VISA’s Digital Solutions, and Mark Smith, CEO of Symbiont.

A simple question about the future of money revealed the varied perspectives of the panelists – leading to more questions about who will be issuing money and how we will move it; whether it will continue to be legal tender; and where the greatest innovations will come from.

In Sam Shrauger’s view, the future will be more about the way we move money. He cited that while many of our transactions are now electronic through computers, debit cards and mobile phones, more than 60 percent of transactions are still done with cash - but those too will soon be ‘electronified.’

"We need to have systems for moving money globally. It’s more important now than it was 10 years ago. It’s more important now than it was a year ago," he explained.

Mark Smith describes the future of money as a "value transfer," believing that the digitization of money is inevitable. He explained that while Sweden says it won’t have paper money by 2030, he feels it should happen faster because the cost of printing money and keeping up with counterfeiting makes it inefficient.

Several questions at the heart of the discussion were raised by Nathanial Popper: Who will issue the money of the future? Can it be issued by an entity other than a government? More importantly, can it be a unit of value created independent of any institution (as is bitcoin)? "It comes down to an issue of trust," Popper explained.

"Bitcoin is becoming more and more centralized, but you can see who is mining the new bitcoins, who is controlling the process – and it’s not three people, but more like 500 people."

While it’s clear that the jury is still out on the exact future of bitcoin, the panel was in agreement that there is enormous potential to explore. Smith explained when pagers first came out, doctors used them but drug dealers used them more – but we didn’t get rid of pagers. "Don’t throw the baby out with the bathwater. Nefarious people will always hijack technology first because they’ll always be looking to game the system. The underlying technology and concepts are very, very good, and we’ll see what happens a decade from now as smart people are thinking about this in new ways."

The rise of fintech companies is changing the financial landscape, creating an entirely new world of alternative lending. Luan Cox described the opportunities and challenges in this emerging world where technology drives peer-to-peer lending and lending clubs, allowing buyers and sellers to find each other with ease. But with the good comes some downside. As these lending start-ups take off and marketing costs are high, there is often a lack of borrowers which can lead to a tendency for companies to lessen standards and increase risk.

So who loses in this new world order? Who gets wiped out?

Smith explains that in 20 years, with processes in deals happening automatically, many functions that are currently labor intensive and time consuming will become so efficient that no one will even be talking about a back office or a middle office. Regulation will keep those functions in place, but banks will be much stronger as a result.

One exciting trend discussed was the innovations being made in developing nations where necessity is creating opportunity. The tremendous rise of mobile technology is allowing financial institutions to cheaply provide a full array of financial services such as micro-lending and better savings tools to underserved consumers with the help of data feedback – services that weren’t possible before.

The panel agreed: It’s about creating effortless, frictionless payment systems. We may see the most innovation in countries where people don’t trust the central bank, where they don’t have access to credit cards, where a digital system is needed to fill a need.
For example, M-pesa is not legal tender, but it represents 32 percent of the Kenyan economy. Popper explained, “It will be interesting to watch. Banks have the resources, but barriers to entry in the US are so great because of regulation. But we can watch M-pesa in the developing world. There will be something really great.” And once those innovations take off, they can be adapted for markets like the US.

While it often seemed that the group raised as many questions as they answered, their varied perspectives and expertise created a dynamic, thought-provoking debate that will leave you asking many questions of your own about the future of cash, the entire system used to purchase goods and invest for tomorrow – a discussion to challenge your thoughts about the future of money.

To watch the complete event, visit https://www.youtube.com/playlist?list=PL-jo4cR9MJ3qhja4uxJgzl5UQbShP1rjq