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Good, ladies and gentlemen,
as you all experience in this caves
computer labyrinth, this
one can meet really interesting people
here and you all did.
Presumably what I did is actually
meeting people with all kinds of
Collard's hats.
I see some hats here, a green,
red, orange, whatever.
But this is another kind of had this guy
is wearing he's wearing the collar
color of money.
And money is
evaporating quite rapidly in
my pocket, sire,
I experience, but he's going to
show us how to trade places,
so trading places.
Sorry to introduce you like that, Mark,
but is used to talk
about block chain technology,
bitcoin or whatever.
And now he's helping banks
to get an understanding about
modern technology currently focusing
on that kind of topics like block
chaining. So we will
explain is how international
money transfers work.
So in a way.
Mike Funk is going to show
us the money.
Please give a welcome applause.
Lit the Fuze, put it in place.
Thank you, Peter, and also thank you all
for having me and being here.
One thing you said, the money is
evaporating from your wallet.
A lot of people are saying it ends up
in banks and they take all our money.
But this dog is not about politics and
whether banks are good or bad or those
things. We're going to look into
technicalities now before
I begin.
Banks have departments and
there are all different functions for
departments.
One of them is the payment department.
But others are like lending,
mortgages, foreign exchange,
those I'm not going to focus on.
I'm only going to focus on the payment
department.
Also interesting to think about it,
different departments is that they have a
different risk profile.
And what I've noticed in the banks where
I've been is all the payment
departments are very risk averse.
They rather make less money
and not lose anything, then
make a lot of money and put a lot of
risk.
There may be different in different
departments. I've not seen them.
I've heard a lot of stories both inside
and outside banks.
One of the things that was very
interesting, very important when you're
going to speak with people in banks is
to understand the concept of a financial
model.
And if there is
somebody here from a block start startup,
try to learn those that will really help
you connect with people in banks.
So to introduce this concept, I'm going
to look at the most simple kind
of payment you can do, and it is called a
book transfer.
And this is happening when in
one bank there are two clients and one
want to send funds to another.
Now I'm going to use real banks names,
most of them in the Netherlands.
But the examples here I have
just made up and
in this financial model, you will see
boxes and every box is a financial
institution. It has a name or a label.
So in this case, it is ABN Amro, one of
the Dutch banks.
And then you can have a couple of
accounts.
You will see there will always be at
least two. Otherwise there is very little
you can do.
An account looks like a T shape
or the right side. You will see one money
is taken out of the account.
We call it a debit.
And on the left side, whenever money
is put into account, we call it to
credit.
So what you see here is a transfer
of 500 euros.
I didn't state that, but let's say euros
from others to Bob.
This is the simple one, and there are a
couple of rules, financial models, and
one of them is when you sum up everything
on the left side and you sum up
everything on the right side within a
single box, it should be equal.
So whenever we take 500 euros
from an account, we have to
put in 500 euros somewhere
else. We cannot invent money in this
way.
Let's make it a little bit more
difficult. We have now two financial
institutions is no longer at ABN
Amro is now moving to Engy
and we still want to transfer 500 euros,
but we cannot move
funds across a box
in the easy way.
So we need to think of a way to do this.
Well, one where you could do this is
introduce a new account in English
system, which is for ABN Amro.
So ABN could hold
funds at AIG.
And then and then when Ali says I want
to send Bob 500 euros, ABN
could pay it out of its engi account to
Bob.
But we need to make something out the top
side to show that would be a flip
account where the money from
others is going to.
This is, by the way, not how it works
exactly with ABN,
but it is to introduce the concept of
these two accounts are now linked
together and they should always mirror
each other. And therefore, we also call
them mirror accounts.
So let's rename it on
the bottom. You see ABN Amro account at
AIG and on the top we see a mirror
account and
different banks write it in different
ways. But one of the notations I've seen
is you just prefix Kamdesh.
So that's what I'm going to do here.
It's important. It's a new rule for
a financial model that accounts
are always mirrored.
If they're not, there is a discrepancy
and there's also sometimes happens in
reality. So
people are going to be involved to fix
the mistakes.
By the way, you're going to do it on a
theoretical level.
Whenever you have some product,
you will have to demonstrate that
everything will work out.
So this rule must be satisfied.
Now, in reality, as I've already said,
this is not how it works.
What ABN and AIG and there's one
interesting reason banks
are risk averse.
So why would ABN put money
in AIG? If AIG goes bankrupt,
ABN will lose money they don't want to.
Still, we want to
do it in this way and we
need to send this 500 euros from Alice
somewhere.
Now, one option you could do is introduce
a bank, the different kind
of bank, one that everybody really
trusts.
And this is like a central bank, for
example.
Now, I'm going to introduce the European
Central Bank target to system here
and target to us.
OK, I'm going to show you a little later.
But it isn't it.
Yes,
you we are moving central bank money.
And as a customer, as
a person or a normal company,
you cannot hold an account at a central
bank. Only financial institutions can
do so.
So here, ABN Amro has an account at
the central bank. IG has one
and now we can make the story work
here.
We debit 500 euros from Aldiss
account. We credit it on the mirror
that ABN has in its book books.
We send a message to the ECB.
We're saying, OK, there is a payment from
others to Bob am
I need to transfer 500 euros from
my account to IG.
So this is what the ECB is going to do.
And then the message is sent to IG.
You have incoming payment, 500
euros have been credited to your account.
Please make sure that Bob will receive
this.
Now, there was green arrows, I
message. So we need some kind of
interbank messaging and
this is where Swift plays a role,
you may have heard Swift in the news.
Swift has been established a long time
ago in the time that we didn't work
the way we work like now,
but for payment, they have two important,
very important, um,
roles.
The first one is they offer a
communication network and
nowadays part of that is going over the
Internet.
But back in the day, this wasn't a case,
of course, and it looks
a bit like this. So everyone wants to
send a message to the ECB.
And first of all, you will need some
address for this.
We have bank identifier codes because,
um, they are eight or
11 digits long
and they have a certain structure.
The first four digits are the bank code.
So in the case of ABN Amro, we
see at the bottom it is ABN Abney.
Then we have two digits for the country
Anel and two digits for location
A2, which is Amsterdam
on the right you see that Aengus also in
Amsterdam on the top you see
the ECB SBF
which is located here in Germany
and first for Frankfurt.
Now ABN Amro sends a message to Swift
Swift Storchak.
A message are forwarded to ECB
and the ECB will acknowledge this.
So despite all that, how
it is on the Internet where we have a
best effort model for messages
here, we actually do acknowledge
everything. And when a message
doesn't arrive, it will retransmit,
et cetera.
Swift will also archive the message.
So whenever in the future there is a
dispute, Swift can say, OK,
here are all the messages that have been
sent. Those times it has been
acknowledged, etc.
so we can reconstruct what has happened
and what would then legally
be the thing that
should be. That should be.
And a second roll of Swift is now we have
this network and we can send messages.
What do those message looks like?
So they create standards,
message definitions, and
nowadays we have two types
commonly used in some places.
M10 ex ante
is the old style, which stands for
Message Stipe's and there are a lot
of them. They all have an identifier of
three digits.
So we have, for example, M2 one of three,
which is a customer payment to a two
is a payment from an institution to
another institution when and not
specifically for a client.
And I intend to inform another
bank that his account has been debited.
There are a lot more.
And then X,
because we are going forward
in time, so we need Actimel,
um, this
is a new standard,
also an ISO standard, actually,
and people who may
communicate with banks may know,
for example, pain one and those
kinds of. But those are also used between
banks.
So let's see some example, maybe one or
three issue credit transfer
for a single a single
credit transfer for customers.
So we're actually clients of banks
are involved.
Here's an example. We have five blocks.
The most interesting block is block four.
It contains all the information and
it is kind of like a tag value
pair.
So, for example, we have detect
a 30 to A and it states
that the first six digits are
to date, June 26 of
May in the year 2000.
We have sent us dollars with the amount
of one thousand one hundred and one
point fifty.
This is the amount that is actually
moving between banks.
Thirty three B is the amount that was
ordered. You see a difference of
20 U.S. dollars.
That's the charge on the bottom.
You see 71 F there
are some charges.
Let's not go to deep into this, but at
this stage, we're sending funds from
here to there and this is all banks
needs to figure this things out.
Then there is block five and it contains
some measures, authentication code.
So it is not easy to change those two
so we can detect transmission errors.
Now, moving to XML,
we need new names, of course, and we need
a smaller font.
But for the rest, this is
an example.
So again, there is an envelope
at the top for those who can read it,
stating this is going from this
institution to this institution.
And there is a content which says there
is one transfer in this XML file and
it has some details.
Um, so this is the example
we were looking at, um.
But there is there is something about
this I told before,
the targeting system is called an
protegees, which stands for real time
gross settlement system.
And here we are transferring like
some people and banks are actually
calling real money.
I don't know what they call the money
that I deposited in my account then, but
this is central bank money.
It beaners.
Um, but
and transaction and target too is quite
expensive.
And
banks normally do transactions
up to hundreds or sometimes thousands
transactions per second.
Dagoberto cannot handle this.
If all of Europe will do, it will
be transmitted this way.
And at the bottom you actually see the
pricing options for type two
transactions.
The cheapest single transaction can be
transported for twelve and a half cents.
And I know for sure that I can send
someone a euro without paying twelve
and a half cents. So there is something
else going on here.
What is actually happening for low
value payments isn't
we are going to net Bachus.
So the example I showed just before, if
a company sends Tamilian to another
company, we call it a high value
payment. We do it in that way.
But I'm not going to show his low value
payments that works like this.
And at the bottom of the four
largest retail banks in the Netherlands,
ABN Amro, Rabobank, Asness Bank and IAG.
And during the day, people
are sending in payment order.
So what an app or whether
through the Internet, you're saying I
want to transfer money.
Now, let's say again, Alissa's at ABN
Amro, ABN sent to a clearinghouse
a message saying, OK, this is
there is a payment.
And one of the clearinghouses we have in
Europe is eBay, step two, another one
mostly in the Netherlands, that sequence.
And they collect all those payments
and they just put them on a heap.
And then periodically
a process starts and this is the
settlement cycle.
So now we have from all banks a
list of payments they want to do.
What we can now do is we cannot add all
together.
So let's say there are a lot of payments
from ABN Amro going to the other banks
and they all sum up to an amount of, say,
800000 euros and incoming
payments for the amount of one million
euros.
Now, the net result is that ABN should
receive two hundred thousand euros.
So there will be one transaction
in Target to just redistributing
things according to all the individual
payments we have seen in this cycle.
So EBA in this case
prepares all this, sends information
back to all the bank saying these are
your incoming payments.
So now I knows Bob is going to be
paid, but IG is not yet going
to pay Bob at this point in time.
EBA sends a message to target to saying
this is how I want to
redistribute the funds and
target to send to all the banks.
Here you have an incoming payment or you
have an outgoing payment.
So there is a credit or a debit on
your account now.
And you see what I
have done, those transactions.
I have those incoming transactions and
this is what happens on target to
it will compute the same sum and see that
the net amount is equal to what happens
at Target, too. And then they say, OK,
I'm now very certain I have received
money, central bank money.
So now I'm going to pay out Bob.
So it looks a bit like this, the slides
are going to be on the west side, by the
way, so if you want to study it more
in depth, then you can take your time.
But there is one more
thing I introduced in here.
And Abian, you see a suspense
account.
Some banks, and I call it the wash
account or control account,
but I like the term suspense.
So banks use different names for
the same thing. Very interesting.
So when Alice sends this payment order
saying I want to those 500 euros to Bob,
the money is taken out of her account.
So it's debited there and we need to put
it somewhere is one of those rules.
So let's put it in the suspense account
at this point in time.
This is no longer a claim on ABN Amro
for this 500 euros, but also
ABN Amro note.
I cannot just use those 500 euros
for anything because it is in the
interest suspense account and it's not in
their own account.
Then when the settlement cycle happened,
Stube money is moved
and it's moved and the ECB target
system and all the banks
and then in their turn will receive
notifications and can perform the final
transfers and they can either go out of a
suspense account or out of the account.
So and I'm already
going to the final part to you, but
there's also a more difficult part, so
it will take a bit of time.
How does thing do things look in an
international cross-currency system?
So let's make it very
interesting.
First of all, the world
is Jewish and there are a lot of banks.
So we need a routing system, a routing
table.
Back in 1987, this wasn't
a routing table.
And every year a new Elmau element that
came out where you can show these are the
banks, this bank has a relationship with
this bank.
The relationships I'm going to show you,
I have just invented them
yesterday. So those are probably not the
ones that are in real life.
But for example, here at Kassabian
as a dollar relationship, the U.S.
dollar relationship with Citibank or with
JP Morgan and this
bank in Brazil has this kind of
relationship with this American bank.
And then the sending bank has
to task.
And at this time it was like flipping
pages, finding around how you could
make sure the funds ends up in
the last in the last bank
beneficiary bank.
So let's let's look at an example here
and what we're going to do.
I've now moved Bob out of Europe,
moved him all the way to Brazil, and he's
now no longer transacting in
euros. But he has an account in Brazilian
real.
And this is still at ABN Amro and has an
account in Euros.
Now, Alice wants to send Bob a payment
for a payment. We need a currency for
this payment.
Um, let's pick up dollars
and we want to send 600 U.S.
dollars.
So the first thing that happens is ABN
Amro has to somehow decide
an amount of euros to take out of
Alice's account.
So we have an exchange rate, an ABN Amro
is going to choose.
Another option could have been ABN Amro
doesn't do U.S. dollar.
So it's first doing a euro payment to a
different bank, maybe a larger
bank who can then
do a foreign exchange.
And then ABN Amro often doesn't even
know how to how much to debit
Alice's account.
So this is a you see here, this is a
complex thing starting to hear, but
let's not dove into that thing.
So 500 euros are taken out of
Alice's account and needs to be credit
to some other account.
Now, what happens in this case is ABN
Amro is going to
actually increase
their position in euros.
So the euros are now going to belong,
are actually owned by ABN Amro
and in return is going to take
out decrees that used
dollar position.
So this is actually selling euros
to ABN Amro to buy back US
dollars.
But those euros and
those dollars need to be somewhere.
So you don't see here where the euros
about probably in the target
two system.
That's a different account.
But we don't even need to touch it
because entirely, too, we don't need to
move euros.
We're selling them to ABN Amro,
but US dollars.
ABN Amro cannot have an account
at the Federal Reserve, the central bank
in the US, because
they don't have a banking license in the
U.S. So they need to start somewhere
else. Well, in this case, they're going
to store it in a commercial bank
in the US, let's say JP
Morgan. As I said, I just invented this
relationship yesterday.
So maybe JP Morgan
has in USD denominated account
in the name of ABN Amro
and we need to move 600 euros
from there to Bangkok.
Safra, which is a Brazilian bank,
yesterday Googled
and then and
we need to make the thing match again.
So we need to mirror it.
And if you do it in that way, it will all
line up pretty easily.
Taking out.
So debiting the position of ABN
Amro in USD, crediting the mirror
account of JP Morgan and the
other side mirror must be flipped.
So ABN Amro is debited.
Banco J. Safra is credited in U.S.
dollars.
Mattituck sent to Brazil
and they are debiting their mirror.
It's a mirror crediting
something in this case there deposition.
So now what's going to happen here
is USD is
sold to Banco J.
Safra and both are
Brazilian Reales.
This happens by Bob, actually, but it's
all hidden in the process.
So two thousand Brazilian reals are
debited from.
The position and the
bureau position and credited to Bob
and Bob has received the funds.
This may seem pretty difficult.
So again, the slides are line if you want
to walk through the process
to to really understand
it. But here are a couple of things that
are interesting here.
Um, and maybe an embryo.
And actually everywhere in Europe, we
have now events and they're all
standardized and automated and there is a
checksum in there. So a lot of mistakes
can be prevented up front in
the US and in Brazil, we have different
systems. So, well,
there is some manual thing in here.
And if the beneficiary account number
is wrong, money may be moved
from JP Morgan,
from ABN to Bank or J.
Safra and message is forwarded.
And in the end they see I
don't know where to put this money.
So a message goes back, which
can be which is also an empty message.
One ninety nine.
If I'm correct in saying, OK,
I don't know what to do with this money,
it goes back to ABN Amro and a manual
processes started.
Manual process takes time and
investigation takes time and it
cost a lot for banks.
So this is actually the reason
or one of the reasons why international
payments are expensive.
A lot of problem errors go on in there.
Those must be corrected.
And a bank can choose to either
charge those customers that
make the mistakes, but not always.
You can really identify them.
So another thing is, well, we know the
amount of mistakes we make.
We have a team.
It cost us this much.
Let's spread it out over all the
Internet, international payments and
just say sending money from
Europe to Brazil is like 15
euros. And then it kind
of works out.
And that's what most banks are then
doing.
And another thing here is
ABN Amro is in the euro
timezone, Europe's time zone.
JP Morgan is in a different time zone
bank, which for sufferers in a different
time zone, more aligned with JP Morgan.
But sometimes it therefore,
when the message is sent to another bank
and their central bank is not open or
they themselves are not open, it just
sits there waiting for the sun going
in their direction.
So this is one of the reasons why it
takes time.
All of the things is, for example, now
there is a US bank in the middle of
a payment from a Europe client
to a Brazilian client.
And the US banks have
very stringent controls
here. They must not be in the path
of any terrorist money, for example.
So JP Morgan may decide for some reason
to delay this this transaction
so they can figure out whether Bob
is actually a
good customer.
So there are a lot of
things that are adding in delays and
costs in the way we do banking
right now.
And this is my most,
uh, uh,
complex example, if you want to see
more complex examples,
just come by after what?
I don't have them here, but maybe we can
send them later on.
Sometimes it's fun to look at them,
but think again.
Banks are risk averse when it goes
to the payment departments.
Thank you very much.
Thank you, Mark.
Thank you for the world without blocking.
I hope we're moving fast.
Are the questions here in this audience?
Yes, here, sir.
You're the first one.
Take your chance.
Thank you for your talk.
My question is, why does ABN Amro
do the.
OK, why does ABN Amro do
this
hook via an American
bank? I think ABN Amro is
not that small of a bank and Brazil
is not that small of a country.
So why does it ABN Amro
does open an account
at a Brazilian commercial bank and do
with them what they do with Morgan, but
avoiding the dollars?
It's a very good question.
And the real answer here is
I invented those relationships.
OK, but to go into a little
bit more subtlety and for
a bank to keep this relationship open,
they it cost them money.
So it depends a lot on how much
transactions they're going to be with
Brazil, for example.
And it costs money for a couple
of reasons. And one of them is, in
fact, they don't like keeping money in
another commercial bank.
So during the year, they do continuous
checks on how is your liquidity position,
how is your solvency position?
And maybe we want to lower the amount
of money we keep in your bank or maybe
we accept a higher amount.
So there's a lot of work going on in
there.
In the past, you saw that there were a
lot more relationships.
And what you see now in banks, especially
since in Europe, we are now
one single region.
You see banks like to decrease the amount
of relationships they have and as a
result, concentrate money in a couple of
large banks.
OK, thank you.
I was wondering if you looked at
how it works, for example, to move other
kinds of assets like stocks,
real estate. Is it a similar process
or is it completely different?
Because that's also a very popular
application of block change.
Yeah, um, the answer
is no, I haven't.
And the reason is
the most things I'm involved with
involved in with banks right now is with
payments.
So for the others, I do know a bit
what is going on, but not in really in
depth.
We have a question there from out of
space, how does this
all work with people or credit cards?
The payments there are usually instant
and it's a very good question.
And actually that payment is not instant.
What is instant is the promise that you
will be paid.
And this.
Now, I have I know one thing,
they call it Cartes, and it's a separate
department and it works completely
different. I have to ask around a bit
what I have understood about credit
cards. And there is
some at some point
in time, there are still obligations.
Um, so
one of the questions I haven't yet an
answer for myself.
For example, if if I have a
credit card at AIG and I want to pay
someone in the US, what happens
when he goes bankrupt before
the money actually goes out?
That's one of the questions I hoped I
could have answered today, but
not yet. Maybe next year.
Okay, I have a question here.
This gentleman white shirt, um,
why don't they just use the central bank?
You know, like, uh, like the European
Central Bank is having a connection with
the American Central Bank, and so they
use those for exchange.
That's also a good question.
And in general, the European
Central Bank has a couple of
roles in society, and one of
them is Target, too,
and another one is having
oversight over the euro area.
But they have nothing to do with U.S.
dollars. And whenever you don't do that,
you're actually importing new risks
that you don't like.
And the central banks,
we want to trust them and
they should therefore be a little
trustworthy, actually, and not do
anything that may be a risk.
Okay, this gentleman here, your bank,
concerning the security with
swift transfers there, it has
have been recently some
some kind of virtual Haith,
for example, I think in Bangladesh a
couple of months ago.
Could you elaborate a bit on how they
how they how it works actually and how
they try to to fix it?
Security only a little bit.
Um, yes.
In the EU saying, you know, he's working
in the financial sector,
but that's also true.
But another thing, a lot of people don't
know everything.
Actually, nobody knows everything in this
sector. So you have to network your way
to the knowledge you want to know.
And if you need a knowledge for your
work, you can you have a reason to do so.
And otherwise you do it in your spare
time or whatever.
Anyway, what happened
with Bangladesh and whatever.
I'm not sure about security
in general, the messages or
some messages I signed and it depends on
the message type and I found
find they have a really interesting
choice. Weissel messages I signed,
I still do not reason, for example, the
empty one of three assigned, which
I believe is a good thing.
But some banks, for example, choose
to only credit to the beneficiary
account when they receive to empty one of
three and empty nine ten, saying
we have received funds in another
commercial bank, for example.
But the nine ten is not signed, so
they wait for two messages, one of them
that can be faked. And I was like, then
why work for wait for this message?
They don't know the answer to people I
could ask. Don't know the answer.
So.
It's amazing to me that the mystical
financial world, they're filled up
with trust.
Yeah, a bit, but yeah.
Yeah, OK.
So I don't know if I trust this guy.
There's a question from outer space
again. I wouldn't, by the way.
No, I know.
Why couldn't the international
money transfer system be better automated
to make the costs
less?
Well, actually, that's one of the reasons
why banks are looking for block change.
They also see this as expensive
and error prone and block
chain is this magical thing, right?
So, yes, they're investigating
and I fully agree.
That's all I can say today.
OK, this gentleman here is arguing since
long time.
So you said for transfer
between two banks in different time
zones, think time because sometimes
waiting for acknowledgment till the sun
come up. Is that why this process is not
automated? So sending messages
back and back and that's it?
Yeah, it actually depends on the banks
that are involved.
So, for
example, AIG wants to be a 24/7
bank, but they depend
on other banks.
So, yeah,
if, for example, there are also banks
that haven't automated the lot.
So if those one of those is in the path,
by definition, it takes time.
But there are also other factors than
only time zone or opening hours
of banks.
But thanks, gentleman
there in the back, please.
And a question about your personal
experience. Why do banks always
say, hey, we want block change when it
seems like they actually only want more
international standardization?
Or do you think they want to separate the
central authorities with some
peer-to-peer technology?
OK, I cannot talk for all banks.
Why do want something?
But what I have seen is they're
interested in the technology.
There is a lot of talk and hype about it
in the media and in conferences
and everywhere. So they're like, OK,
this is something important and
also one which I find very interesting.
A lot of billions of dollars have been
invested in startups, so it must be
important. So let's also invest some
more, follow the
money. What's the message?
Isn't it?
But OK, besides that reasoning
and most banks I'm involved
with actually trying to understand the
technology and a lot of ideas have
already been scraped.
They say, OK, block change is not a fit
in here.
And so they're actually doing
a real job in understanding this
thing.
This you have a question?
Yeah, sure.
How can a bank like
revelant let their customers get
money all over the world in every
currency for free?
I'm sorry. How can it
be that there's a new bank called
Revelant and
you can have a credit card from them?
I have a credit card and I can get money
all over the world in every currency form
for free.
So how is that possible?
Quite probably you get it for free, but
the bank is paying for it or their
investors.
Yeah, that's true.
OK, so for example, I
am in the Netherlands,
you have a payment system called ideal
and you pay for a transaction that's
mostly used for Internet payment.
But lately banks are
building apps or functionality.
So you can send an ideal link to someone
else as a consumer and they don't charge
for it. But banks still have to pay the
other banks and that's
they're paying for it because they want
the publicity or they want a certain
image or whatever else you think
about. You can get money out of an ATM
for free. But those very secure devices,
which has a lot of manpower, men are
involved.
They cost money. So you as a customer,
I just a cost center and not a profit
center for a bank.
Most things customers are retail.
Customers do it. Banks don't make them
real money
or profits.
At least
banks are a little bit providing
umbrellas when the sun is shining,
of course.
But when the first raindrop falls,
there goes the umbrella.
That's my experience pleaser.
So you say that a lot of costs
happen when a transaction fails.
Reitman's is error messages sent back
and it's manually cleared.
And I'm wondering, I mean,
these could be solved with modern
communication protocols and banks working
on a system to anticipate the
result of sending this
all ends and empty message
when they know that it will fail.
Yeah, a little bit, yes.
But one of the things here is also
standardization.
As long as everybody talks in the same
way, for example, format of
account numbers and things are easier.
And that's one of the things that has
happening, is happening in Europe.
Standardize everything before SEPA
and Ibanez, the Netherlands had a
different system than Belgium and the
different one than in Luxembourg, and all
the countries had their own thing.
So that's actually why
SEPA is there to standardize what's going
on in this region.
Now, one of the parts of supplies,
for example, in other countries
are now looking into can we also
incorporate Iban just to lower
the amount of errors that we have because
of this region?
And of course, there are more reasons,
but standardization is a very important
thing.
Before you can actually automated,
sir, here at the right side, you have a
question or you were just waiting for the
bus, OK, the bank
and the international
transfers.
Is there a protocol, a standardized
protocol which each bank must
follow and to develop that and
can I can I open a bank and say, oh,
no, I have my own protocol
and or of China
maybe says no, we think we
can do it better.
And yeah, I would be
very interesting to try,
but the standards are
as long. The most important thing is that
two banks that have a relationship
also have a standard.
Now, one of the most nice
thing is that you can buy standard
software for banks if you
want to start your own bank.
So some protocols have been implemented
like the empty defined by
SWIFT. So that becomes the standard
in that way. So it's not a standard
because of law, but it's the standard
because, well, it
makes things easier to do things the same
way.
You had that experience.
You told me about
considering to start a Bitcoin
bank then, wasn't it?
So, yes, if you want to talk more
about this through this after this show,
we have some other questions.
I know you've been talking about
irregularities in this.
Let's call it money routing system, I
guess then and you've been saying that
manual work is being involved in
resolving these issues.
Do you know anything about the social
relationships between bank personnel
around the globe or how
are these things being resolved?
Are there people involved who know each
other? How do they know each other?
I actually have no idea.
I have seen
an example of a marriage where one
bank sends to another bank and it doesn't
say names of of people.
It's just like regarding
empty message with this identifier
if this is going on and.
So you could automated, you could
say, but then
the banks have to trust each other, vice
versa, above the claims that are
being made, right?
Well, maybe, maybe not on this level,
maybe not on this level.
But, yes, when there is a relationship,
you need to trust each other and
specifically in one direction, because
one bank has money in the other,
the other way around to trust could be a
little less.
But whenever you're sending
a message saying this is
going wrong, that message is
normally signed and
then whatever is in the message is
therefore legally binding.
There is also, by the way, a non signed
check message and this is not used
for this functionality. So whenever
something goes wrong there, then you
first have to set up a relationship and
that's also difficult. So therefore,
sometimes you see the message flowing
back to in the same route, but a
different direction.
OK, I've personally I have one last
question for you there.
Can we can we talk about
the revolving door principle
as well in the banking
bitcoin industry?
Like, OK, I don't know the level.
It's like a government in America is
happening currently, for instance,
through the revolving door where people
first start working at financial
sector and then in in
the governmental sector, in this case,
bitcoin and banking.
It's a good question.
And I know a lot of people
who works in banks or worked
in banks and are getting interested in
Bitcoin.
I'd like Jane,
I know very little amount of people that
go in the other end and I even don't know
one who is really doing a revolving door
kind of action.
OK, so this is the first one.
Well, thank you, guys.
Thank you.