The Wharton Future of Finance Forum featured prominent business executives, legislators, regulators, academics, and think tank thought leaders. Forward-looking and nuanced comments were made which were very insightful and went beyond the elemental “AI will change the world” although some speakers provided concrete examples where they used AI to deliver breakthrough gains in productivity and capabilities. Cryptocurrencies role in US markets has neither clarity nor consensus. In other markets, there are often more practical use cases especially for stablecoins. Our work in emerging markets has demonstrated that leapfrogging is natural, including in finance; speakers at the forum amplified this notion. Without the constraints of legacy institutions, regulations, and entrenched technologies, financial market participation can be driven to a digitally native experience bypassing the friction from things like cash, bank branches, and paper-based processes. Stablecoins are extremely useful when costly and inefficient payments systems leave large swaths of a population unbanked. Bitcoin supply is fixed as is true with many other assets. With pricing driven solely by demand, it is tempting to believe that prices can only rise because new supply cannot enter to balance the market. However, as a speculative asset, pricing is momentum driven which can lead to dramatic swings. Upside movement has been the case with the pledged support from the incoming administration. While reduced regulation is generally favorable to business growth, there can be unintended consequences as we have witnessed in the past. Regulation by enforcement and regulatory notices can create even greater friction despite movement to a lighter touch. The potential for overreach remains and the remedy lies in the judicial system. This adds cost and uncertainty which investors dislike. Private credit’s growth with institutional investors and family officers continues to grow leading to an evolving asset class.?Market participation is expanding from direct lending to asset-based lending.?As demand for exposure and risk appetites grow, defaults are rising.?This is leading to a secondary market and rollups of distressed debt. These are emerging trends in this asset class according to those on the leading edge. The world of finance is changing along with the rest of the world. The pace of change is growing more rapidly than ever before leading to exciting times filled with new opportunities, interesting challenges, and great potential for a better future. While there are many problems in the world, the possibilities for positive change are alluring. Best wishes for a wonderful New Year. #cryptocurrencies #stablecoins #banking #payments #bitcoin #privatecredit #regulation #wharton?
