HEC Conference Launches New Research Center on the Digital Revolution

The HEC Center on the Future of Money and Digital Assets inaugurated its activities with a major conference linking and DLTs (Distributed Ledger Technology) with economics, finance and law. The two-day meeting brought together academics with industry actors and regulators to evaluate these emerging technologies in the light of remarkable cycles of innovation in the digital economy.

It has not escaped the attention of academic observers that new forms of digital money such as cryptocurrencies and non-fungible tokens (NFTs), stablecoins, central bank digital currencies (CBDCs) and other blockchain-based digital asserts are shaking the very foundations of the world of finance. This technological revolution prompted HEC Associate Professor of Law and AI, David Restrepo, to begin a class on the digital transformation back in 2017. “I wasn’t aware that almost every person in the world buys something at least once a day,” he told participants at his Center’s inaugural conference on the Jouy-en-Josas campus six weeks ago. “It was an incredible field to explore and, ever since, I’ve been teaching and researching what I call institutionalizing payments.”

This exploration, articulated around the course “The Future of Money: Innovations and Policy” that Restrepo has been teaching since 2019,  went up a notch in May 2023. That’s when HEC, its Foundation and Europe’s leading payments company, Worldline, launched a Future of Money chair, held by the HEC law professor. This renewable three-year partnership aims to develop knowledge about payments through research and to teach future talent in the sector. “With this conference, we are formally launching the Center,” he said at the November-December conference, “with a mission to connect and create an ecosystem connecting our research and teaching to policy, citizenship and industry.” In the opening session of the academic gathering, Restrepo outlined the challenges he and his fellow-organizers, Bruno Biais, Gaetano Gaballo, Anastasia Buyalskaya and Pablo Baquero, are trying to answer: “There are certain breaking points we have identified. We are seeing a lot of new, unfinished, technology flood the industry. There is also what we call corporate mentalization, as well as disruption caused by startups who are new actors. The latter are displaying more agility because they don’t deal with silos, among other things. So, there is a high degree of evolution in technology and business which needs to be balanced out by consumer protection, regulation, and so on.” The HEC Center is to implement a laboratory to study these questions. It will be interdisciplinary and enjoy the input of multiple stakeholders. In the spring 2024, it will also inaugurate a five-week training course for HEC students, aimed at making them payments experts, with a deep understanding of the relevance of payments in society.

The Importance of Tokenized Currencies

The conference involved panel debates, workshops and plenary sessions scrutinizing issues around blockchain technology, through economic, financial and legal lenses. The opening panel explored tokenized money and its value proposition in wholesale and retail payment environments. Four panelists discussed how these monies and DLT platforms can address current limitations in payments or respond to unmet user needs. One of the panelists, Courtney Lamar Williams, noted the distinct features that are likely to be prominent in a future payments landscape: “(These include) foundational services like digital token custody (the practice of securely storing, managing and safeguarding digital assets, Ed.), inter-operability between different blockchains, flexible yet robust regulatory frameworks, reduction of the need for traditional banking infrastructure and the lowering transaction costs.” The blockchain strategist and former HEC student in innovation and entrepreneurship (H22) also summed up the wider picture: “(Tokenized money will have an) impact on monetary policy and financial stability. New tools, approaches and governance (will be created to) reinforce the dissemination of policies (designed) to control the money supply… or to support financial stability in response to the widespread adoption of tokenized monies.”

Projections into the future were also discussed in the roundtable that followed the first panel debate. Actors in the banking and legal fields, Adeline Bachellerie (Banque de France) and Rok Žvelc (European Commission) discussed consequences. Zvelc claimed that the growing adoption of E-money tokens or asset reference tokens in non-Euro currencies could provoke monetary sovereignty issues around currency substitution. The EC’s legal officer believes digital Euros could lead to using money in an online form throughout the Eurozone. The BdF’s Adeline Bachellerie, meanwhile, insisted that ESG criteria could be included in her bank’s exploration of DLT. The Deputy Director in the Innovation and Financial Market Infrastructures department added that the BdF is looking at ways DLT is to benefit from transparency and the acceleration that could result from transacting without intermediaries.

Fundamental Research Questions

For David Restrepo, the challenges remain “huge”: “These come down to banks having their own blockchains and communicating with public services,” said the Future of Money research chairholder. “The legal norms of European states must be interoperable, so systems can speak to each other. This means a shift into the migration of rules into technical systems.” Restrepo will focus the research of his Center on the interoperability of these new ecosystems and data spaces: “We’re going to study how inter-comparable they are. What are the implications? Social trade-offs? Economic efficiency? Technical specifications? Rule implementation?” Questions which touch multiple aspects of the academic, industrial and societal circles in the coming decades. At this inaugural conference, Restrepo announced the launch of a publication which will establish an industry index: “We’re going to look at technology regulations, consumer and market dynamics, an index per sector. It’s going to be both an empirical and a theoretical work, to provide signals to academics and industrial actors about what is going on in this new sector.”

All those attending are looking forward to the follow-up conference to gauge the Center’s crucial research in this field. Meanwhile, HEC is to instigate a “Future of Money and Payments” certificate for final year Master students in its MBA and Executive MBA programs in the spring of this year. These current and future leaders have a vital role to play in answering the dilemma regarding regulating the regulatory guardrails that must be implemented for these digital assets. Indeed, rarely has the world of finance seen such a rapid evolution in these foundational technologies which involve the future of money and digital assets. Its ability to innovate and create legal and data-driven safeguards to answer the emerging digitalization of our moneys.