Digital Currency Wars: A National Security Crisis Simulation

good evening and welcome to the John F Kennedy jr. forum my name is Estelle khumba Forenza I am a first year studying economics at the college and I'm a member of the JFK jr. forum committee here at the Institute of Politics before we begin please note the exit doors which are located on both the park side and the JFK street side of the forum in the event of an emergency walk to the exit closest to you and congregate in the JFK park please also take a moment now to silence your cell phones you can join the conversation online with the hashtag JFK junior forum live and interact with our student run instagram at JFK junior forum for behind-the-scenes highlights please take your seats now and join me in welcoming our guests and Greg Honan and Sakina Haider student co-chairs of the economic diplomacy initiative simulation [Applause] hi everyone thanks for coming to digital currency wars a national security crisis simulation hosted by the developer centers economic diplomacy initiative the economic diplomacy initiative led by Nick burns Larry Summers and Aditya Kumar aimed to provide analysis and recommendations to policymakers on challenges at the intersection of economic policy and national security this simulation was developed by a group of Kennedy school students who created the scenario delivered policy briefs and staff the principle is all week so to start I want to briefly explain where we are right now today the u.s. is the dominant economic power in part because of the strength of the US dollar and US financial institutions no matter how you cut the international monetary system the dollar is the primary currency the u.s. leverages this power to do everything from setting trade policy to sanctioning adversaries we aim to challenge the notion that the US dollar and the us-led monetary system will always retain this lead with the development of digital currencies things could change quickly it's hard to predict the future but in this simulation will play out one scenario to learn how the rise of digital currencies could reshape geopolitics all scenario takes place two years from today on November 19 20 21 we have simulated a world in which one big thing has changed in march 2020 the People's Bank of China launched a sovereign digital currency known as the digital yuan China is the only major economy with such a currency in circulation although several nations including the UK Canada and Israel are actively considering similar projects the launch of this digital currency is part of China's Digital Silk Road strategy to build its global political and economic influence from investments and tech giants like Huawei to the creation of smart cities along the belgian road this new digital currency is the natural next step these policies demonstrate an integrated and crucially forward-looking Chinese economic diplomacy strategy while the US and its allies continue to rely on traditional to CTools so the digital yuan is centrally issued by the People's Bank of China and fully backed by Fiat reserves the currency is stored in digital wallets and payments can be made using a number of applications including a leap a WeChat and mobile banking apps it's based on a two-tier system where the People's Bank of China issues the currency to select banks and payment providers and then these institutions redistribute it to individuals and to businesses the bank service nodes in a system confirming and verifying users and transactions through a mutually understood protocol all transactions are encrypted and officials at the People's Bank of China have said they aim to strike a balance between anonymity and national security concerns in all scenario the digital yuan has taken off rapidly and represents 95 percent of all domestic payments in China retail customers have flocked at the currency because of its ease of use and reduced fees China's also leveraged its belt and Road initiative network in order to promote adoption within the business community Bri contractors and the Caucasus Central Asia and Africa can quickly and cheaply convert digital yuan to local currency using Chinese banks in addition to this China has been leading a campaign to increase adoption of the digital yuan across Southeast Asia expanding the government's influence over the region as a whole today a growing number of retail payments in Indonesia Miami Cambodia and Lao are in digital yuan in our scenario we see this as a strategic decision by China to bring more countries into its sphere of economic and political influence so on the stage tonight you will see a live simulation of a national security council's principles committee meeting at the White House the participants will react to breaking news debate policy options and try to bring together a set of recommendations for the president simultaneously you'll be able to watch how the crisis is being viewed in the outside world by allies the media and the public on the screen please note in tonight's simulation participants are speaking only in their personal capacities and so with that backdrop in mind let's begin [Music] this is Jane Korres we are following the breaking news coming in from North Korea for an alarming new round of missile tests suggests that kim jung-eun has advanced his nuclear program further than Washington has understood I'm joined by David Sanger New York Times national security correspondent live from Harvard Kennedy School David how significant is this test and is it a big breakthrough well Jane just a few days ago the North Koreans conducted their first big long-range intercontinental ballistic missile test since November of 2017 and what's interesting about this test was both the nature of it and the range of it so we it went about 2,100 miles it was aimed south that went over the Philippines and into the Philippine Sea but what made it even more complicated and more impressive in some ways was that they released a simulated warhead because they needed to show that they had solved the one big remaining problem that they've had so far which is their warhead could survive re-entry into the atmosphere and land on a target and once you've proven that you basically solved the last major problem that you need to solve in order to demonstrate that you could deliver a nuclear weapon we're hearing reports that North Korea may be using China's digital Guan currency to evade sanctions and purchase weapons material how is the digital one being used to thwart American security interests well the digital yuan is an opportunity for the North Koreans to break free of the American hold on dollar transactions the reason that financial sanctions have largely worked against North Korea is that most transactions have to clear banks in dollars now there's always been a fair bit of black market trade particularly over the North Korea and Chinese border I've been up on that border as you have Jane many times and you know you see oil flowing cause you see people trading in goods and using a black market that's been pretty healthy but the North Koreans can't really buy much on the outside market without having dollars so now all of a sudden this digital wand which is a digital currency backed by the the People's Bank of China and of course supported by Chinese commercial banks gives an opportunity to do full transactions without ever having to go through a dollar clearance process and that means that if the Chinese decide at any point to break free of enforcing the sanctions they can do so but what's even better for the Chinese is that there's very little visibility into how these transactions work so the US would have a very hard time proving that in fact the Chinese are participating in sanctions buster David thanks for that insight we'll be right back [Music] good evening thank you all for coming on short notice to the White House for a principals committee meeting I know that you all have been briefed on the background intelligence on the North Korean missile test that occurred on the 17th of November the president is following this very closely I've spoken with her several times since the test she believed so strongly in the importance of this that she asked the vice president to show up for the PC which as you all know is extremely unusual thank you very much madam vice president for coming yes ma'am I'm gonna try to run a tight ship here but I feel the pressure so the agenda as you all know from the read ahead that we sent out to the department's earlier today and from your deputies who met earlier this morning is very clear three important things that we want to talk about first we're gonna review the normal set of response options that we have in response to a North Korean missile test and provocation cycle then second which is the emphasis for the president is that we want to talk about the potential threat to US national interests by the digital tuan and maybe move off of Swift and of course we'll conclude by seeing what our interests are at stake here and trying to come up with options for the president so that we can give her a holistic strategy so before we jump right into it I'm going to turn it over to my able deputy national security adviser Aditi Kumar for an update on this situation in fact over southern Japan and landed in the Philippine Sea US Pacific Command confirmed its trajectory over Japan the CIA indicated that this demonstration simulated a functioning reentry vehicle or RV a working RV was the last technical hurdle for the North Koreans to reliably deliver a nuclear warhead against a target information shared from the South Korean intelligence service from human sources indicates that North Korea used an appropriately weighted dummy warhead for the test the CIA believes with a high degree of confidence that this missile can carry a nuclear weapon like the one North Korea tested in September of 2017 capable of destroying a major American city taken together these assessments apply one that North Korea now poses a direct nuclear threat to our forces in Guam and two with a medium degree of confidence the CIA assesses that within six to nine months North Korea will have the capability to deliver a nuclear warhead against the continental United States we believe North Korea has been able to evade UN sanctions and purchase important commodities essential missile components and nuclear expertise using the digital yuan currency this has helped develop their missile program the digital yuan allows North Korea to bypass US and United Nations Security Council sanctions moreover we are completely unable to track these transactions since they don't go through Swift or us clearing or settlement systems the full payments chain is controlled by the Chinese okay thank you Aditi as I mentioned we have a well-developed set of options so at this point what I'd like to do is turn of course to the vice president but I just wanted to remind you because we have a limited amount of time we're gonna keep our comments for this opening session - one or two minutes so that we can move on to the conversation about the digital currency madam vice president what's your perspective on the strategic situation as it is sure um I know you've run the process here and I don't want to second-guess you but I just want to say I think it's odd it's taken us two days to meet after this missile test just to take that as it is yes ma'am however I do want to begin this meeting and I will be a consistent voice on this point is that I don't want us to lose track of the large geopolitical context in which this is happening of course we've got this urgent issue related to North Korea but we secondly and I would say even more importantly have a concern about China and this has to be looked at this digital yuan has to be looked at in the context of us-china strategic competition and that is the context in which I hope we'll have this conversation China is our most important bilateral relationship and as we all know it's gotten much more contentious over the last few years and in my mind this this development of a digital yuan really poses some real advantages for the Chinese and some real potential costs and risks for the United States so on the advantages front I hope we'll talk about how you know we we were caught flat-footed on the belt and Road initiative the first effort of the belt and road initiative by China we didn't have a strategic response that wasn't our administration but let's not be in that position again for the second chapter of the belt and Road initiative this one a virtual a digital currency and keep in mind that the data we've all heard them say the data is the new oil and in the world of competition around artificial intelligence the fact that china now has data not only relating to 1.4 billion Chinese but also however hundreds of millions of Indonesians of Vietnamese whoever is using this currency gives China this real advantage and a eye on the cost in risk to the United States I'm sure we'll talk our Secretary of State I'm sure we'll talk about sanctions and how we've been so reliant on this tool and how it is really potentially jeopardized by this but I also worry about are we are we going down the road of bifurcating the global economy and how far down are we on that road and do our options actually take us further down that road and what does that mean for the health of the US economy and the global economy and that of our allies so in short I think this meeting is long overdue and I hope we'll make good use of our time thank you madam vice president as you know the the DC process can sometimes take a little while to get everything together so of course doing Airbus secretary burns secretary burns could you could you give us your perspective on diplomatic options for the president and the countries that relate to the missile test first and we'll move on to the digital currency issues later thank you madam vice president you won't be surprised I agree completely with your brilliant remarks thank you very much colleagues were facing twin crises the first is China's central bank issued digital currency its impact on American economic power on the role of the dollar as a reserve currency State Department's focus on that but the capacity in this government is with Larry and Gary and Neha we're obviously going to defer to you it would be interesting to know for our group however do we have such a capacity are the Treasury and Fed or anyone else in our government National Economic Council developing this shouldn't we have it that's one question second North Korea's missile test ash and I of course have been in constant communication we talked just a couple of hours ago we're in a tight spot our major means to contain and deter the North Koreans has been financial sanctions and now that's imperiled by the fact that North Korea is accessing the digital yuan in the medium-term other proliferators like Iran could avail themselves for that without as the vice president said our major weapon so we do need to think about this we need options if sanctions are not immediately available to us and frankly I think we need more information I'm sure ash will go into it in greater detail about the trajectory of that missile because you'll notice from the media report they had a different trajectory than the report just given to us by the deputy national security adviser finally Eric just two recommendations first diplomatic ash and I obviously need to get on the phone with our Chinese counterparts I'm going to call the state councilor who reports directly to Xi Jinping Yong you're sure we've already had an emergency as you know the UN Security Council meeting we did that madam vice president within three hours of our of our receipt of the news of this we got it on the red phone I've talked to the foreign ministers of Japan South Korea Australia and I've talked to Ursula of Underland the new foreign policy chief of the European Union they're with us in applying necessary economic leverage and political leverage to get the attention of the Chinese final point I hope colleagues will not mind that I did call the president this morning I felt that he needed our advice and I gave him a sense of what we're doing diplomatically now as you know he's at his family home in Wilmington Delaware and because he's been so successful actually because the president's on the road with her entourage on Air Force One because Eric you know I have high regard for you but you seem to be confused this gender is remotely relevant because the president has been so successful in revitalizing our infrastructure and developing a bullet train for the Northeast Corridor it'll be here in 45 minutes thank you okay we'll save domestic issues for a later day secretary summers you've heard all of the things that the Secretary of State has done to get options in motion mr. secretary with all due respect if you're going to speak to the president in the future if you could let me know that will help us run a better process secretary summers what are your thoughts on the efficacy of bank sanctions and the options that we may have available and just how much leverage do we have over the North Koreans right now I wish I had better news fundamentally our ability to sanction North Korea in a devastating way depends upon Chinese cooperation if goods can be imported into China and taken across the border from China to North Korea North Korea has a lifeline that was true before the digital one was invented and that is true now in the presence of the digital you want our ability to lever North Korean sanctions he's almost wholly dependent on the degree to which we can achieve cooperation with the Chinese and so I believe our strategy needs to focus on what we can work out with the Chinese in this matter the Vice President is right we have terrible problems with the Chinese they have been provocative across many spheres from the economic to the technological to the human rights to cheating at the Olympics that would have been unimaginable even a few years ago but we also have important areas of mutual interest they do not want to see a flourishing drug trade sponsored by North Korea it is their machinery that is closest to the North Korean border and is it greatest risk for North Korean cyber attack we need to formulate a strategy that is directed at achieving cooperation with China we will not successfully starved North Korea economically without the cooperation of China and certainly not if it is their objective to see us fail in that objective and it is that central reality that needs to shape our response in designing a sanctions regime I would submit ok Thank You secretary summers secretary Carter you've always been a little more hawkish on the Chinese than any secretary of the Treasury so I'm hoping with all the experience you have dealing with the North Koreans that you have a little bit better news for us in terms of our response options and our current posture as it relates to the most recent test well let me associate and first of all and most importantly what does this actually mean that they have tested a missile with that range and an RV is this something Americans should loosely what they've done is fly one missile towards Guam for about a third of the distance that it would take to get to the west coast to the United States not that it's not the same as proving you can do it but it comes it shows that they will what we've always known for quite some time will eventually get there if left to follow their own path and I you know I appreciate that the meeting is focused on economics and I think that's really where it should be but let me just remind you so that you can remind the the president where we stand if North Korea does proceed it will proceed steadily but slowly to deploy missiles that are capable of reaching the United States with a nuclear warhead we've anticipated that for quite some time by the way Guam also and we have missile defenses and I'm reasonably confident in their capabilities against small numbers of North Korean ICBM so we are not completely exposed and you might also remind the president that he doesn't need to he or she doesn't need to change his or well his behavior I won't need to disturb him in mar-a-lago with an abrupt phone call just to complete the picture here be call and I this is important because this is a no kidding thing this this this develops in in not in three days waiting for a meeting and three hours waiting for a phone call but in three minutes and it's within a very few minutes that we need to commit those interceptors that is a decision that the president has not reserved to himself as he has reserved the decision to use nuclear weapons in retaliation for a North Korean strike that is a decision he has reserved himself and has not even delegated to me he has delegated the authority to launch interceptor missiles to me because that's a much lower risk thing to do because they won't they they can't do anything except fly up in space and blow up and in space and I haven't earned delegated that to the commander of Northern Command and they wait minute by minute with authority to do that I only say that because I don't want the president to be concerned that this has to change the alert status that that he or she themself needs to choose that the the bottom line remains they so you wouldn't say that you've changed your estimate on the antenna at North Korean sir conduct a strike against the United States even though their capability me no we knew we'd get there it certainly is an unfortunate event okay militarily it doesn't change things abruptly right overnight for us fortunately I also will remind you that if it came to war on the Korean Peninsula that is an intensity of violence of the kind the world has not seen since the last Korean War and so that is a serious business we're ready for that too we will destroy the North Korean armed forces and will destroy the Pyongyang regime of that I'm certain but that is a very very ugly war so all these are unpleasant alternatives which is why we've worked so hard at diplomacy and use the weapon of sanctions and to the extent as the Secretary of Treasury notes that weapon is undermined by this Chinese development if indeed it actually is then we're more reliant than we have ever been on not our coercive power through Swift but our persuasive power were the Chinese and the Secretary of Treasury has already made that clear he prefaced his remarks by saying he has bad news I guess I have worse news which is that we have 30 years of history of not persuading the Chinese to use their leverage and that's things like economic or otherwise against North Korea and the situation of having a digital currency doesn't really change that all that much the Chinese have never really done that much at patrolling black market kind of stuff digital currency makes it marginally more possible but it doesn't change the game entire so we continue to have a bad hand I don't I wouldn't say it has dramatically changed okay so that is the perfect transition to the number two item on the agenda which is now talking about the digital you wanna MIT what it may mean to our ability to leverage the North Koreans to inhibit them from making progress over the next six to nine months so that they don't have that capability in the best case to hit the United States at least on the west coast so what I'd like to do now because we have the response options set for normal missile tests is turn over to the DNI first and actually excuse me I'm going to turn it over to our brand new digital currencies are this is Nahan Narula you know the president has identified this being as forward-looking as she is in technology and digital currencies as a priority for the administration took the initiative to appoint a digital currencies are known here forth as the crypto czar could you tell us a little bit Neha I want to be very clear yes and she was or the president with all the principles here that while we at the Treasury Department of course welcomed the existence of a currencies are and we very much believe in the importance of coordination in this area the preparation the printing the regulating the managing of all US currency is according to the Constitution correct prerogative oh yes secretary summers all those cool traditional curls license to work with the currency official who has been appointed that's great because we need someone who knows about these current issues and new technology the president hired nee-naw nee-naw go ahead could you talk to us a little bit about what the digital you wanna means and in particular how could the North Koreans be using this to support their missile programs and their nuclear program well thank you very much and you know secretary it's it's always great to talk to you about currency you know you bring up the printing a lot so the president really I think was really very forward-looking in deciding to create this position and realizing that the fundamental nature of money is really changing it's becoming digital it's it's it's no longer the paper bills the coins the even the traditional banking system that we've had we've seen surface something completely different and so when it comes to the digital one you know this has been in the works for quite a while even back when I was I was working at MIT I know that that China has been pushing this forward and so I can say that it was a great move to to start to raise this role and to raise this concern and to bring bring together all the experts that are spread across various government agencies now when it comes to the way that North Korea can use digital currency over the past few years they've been doing all sorts of things to bolster their economy with digital currency sending these missiles requires money and they have been using cyber attacks across crypto currency exchanges banks and the Swift system in order to raise money in order to conduct these attacks some reports say on the order of two billion dollars that they've been able to procure so really the one is just the latest in this new way of giving the North Koreans access to money that they were trying to get access to before okay great thank you so Gary you're the assistant to the president for our economic policy have a deep background in digital currencies as well one of the questions that the president has is can we definitively say that the Chinese have the ability to see these wand transactions that the North Koreans are using and is it the Chinese government or is the Chinese banks how much visibility will we have in the transactions Emeritus I'm sorry to interrupt but we have to get at some point in this meeting to a report from these people or Treasury and whether we should have this capacity that's right Thank You mr. secretary we're gonna try to avoid some of the tendencies of the Obama administration it not just focus on the problem for the entire PC but get to options later on so Gary go ahead I want to say first what an honor is to serve with the secretary again I served with him once before I do think that the digital one is totally transparent to the Chinese government People's Bank of China initiated this several years ago basically to compete in their domestic payment space with two big tech companies Alibaba was a lipe intention with WeChat BAE it was kind of a domestic inspired thing you might remember Facebook was also kicking around a digital currency call we'll talk a little bit more about that later yes but they absolutely the Chinese government has transparency into it with all respect secretary though I think I mean interrupts do you mean therefore that they did not have transparency into Halliday I think that the transparency into the digital hewan is higher i do think mr. secretary they have transparency when they wish to have it into a lipe but last year they actually made a leap a wallets and WeChat pay while it's digital hewan wallets so now it's all a unified he's done this I'm sorry I started based on the fact that these people if we go to China for 45 minutes get total transparency into every bit of technology we've ever possessed in our lives I find it inconceivable that they did not previously have complete transparency with respect to anything that any nice company or enterprise and anyway that's exactly the question first we're hoping you take your burner phone when you go to China but for Gary so it is the case just to confirm what the Secretary of Defense or treasurer is saying the Chinese would have visibility into these transactions absolutely and is it that they know what they're seeing when a Chinese are transacting with our respect mr. secretary is a leap a and WeChat pay are used in the retail space and Secretary of Treasury is absolutely right they have that visibility but now it's a third party in a country North Korea using that along with a new system called a cross-border payment system a CIPS which is competing with Swift so they have a new messaging system that they stood up in 2016 as you recall and that new messaging system I don't think it will undermine the role of the US dollar in international commerce but it absolutely puts the bet that Swift cannot be used as an instrument this is a really important fact excuse me madam vice president that we're going to examine a little bit later on but with that madam vice president coach yes thank you for yielding the floor of course I'd like to know about the Civic's this basically am I correct in understanding that it is the Chinese equivalent to Swift they actually took the software from Swift with the Memorandum of Understanding they took that software and created their own messaging system and are there other countries that are using it or might potentially use it and is there a tipping point at which point the global economy will be in fact bifurcated again I think it were decades away from China developing the robust capital markets and the legal systems to compete with the US dollar but to your question yes other countries have adopted the CIPS Russia has back in 2019 they entered in a bunch of agreements and so they're moving value money outside of the Swift system and more and more all respect to the State Department we won't be able to use Swift we've sort of weaponize Swift but we won't be able to use it that much longer as always madam vice president excellent question and we're gonna continue around any good process just like a good deputy national security adviser in the bush administration would for the Director of National Intelligence now the question is does the u.s. ability to enforce sanctions on North Korea become impacted when we know the North Koreans are moving towards a digital one they're using that maybe musiah moving off Swift what's your bottom line assessment from the DNI on the enforceability and usefulness leverage of sanctions I think at the tactical level it really depends on what information we have and we've had some success going after digital currency efforts by other countries like Iran by gathering enough information about digital IP addresses related to the currencies whether we can do that here I can't make those promises we've been obviously hard at work trying to gather any information we have that we could be you know putting to use in that kind of strategy and it's very challenging but at a strategic level I wanted to kind of go back to secretary summers remarks and I completely agree that that really the cooperation with China is the key here but what we talked about so far I think is the Chinese government and there's another actor involved here with it which are the Chinese commercial banks that as I understand it the way of the digital currency is structured Chinese commercial banks are in the middle of it and they have an interest in doing business in the United States and so at some point we need to think about what kind of pressure and other tools can we use to focus on those banks and their interests in the United States and that's what we have to decide what appetite do we have how much pressure do we want to put on them and how would we approach it but I think a strategy could be developed around do those banks Chinese banks have any ability to make independent decisions if the Chinese government is telling them that they need to distribute this digital you want I mean it's pressure on those individual banks of any value about whether they want to give up completely business the United States and they may choose or may be forced to make that choice but it's not what we've seen them doing the past okay yeah we want to keep in mind points of leverage we have in order to coerce or achieve our interest so we're going to mark that down secretary summers ain't gonna get a couple things straight first as the president pointed out in her campaign the degree of separation between US banks and the US government is less than immense with the tendency for the US government historically to follow the instincts of US banks so are you saying that banks are analogous to Chinese no I'm not I'm saying in China the banks and the government are one and the banks will do what the government wants it to and the vice president is entirely right and we can think of ourselves as dealing with one decision maker which is the Chinese government this point that's the first point the second point is respectfully I don't think it matters one win just what the Chinese government can see of any kind of one system anything that's got to do with the one the Chinese government's are gonna see plenty easily the threat I mean the challenge here is that we have had what if you step back from the point of view of the rest of the world it's a kind of remarkable power which is that if somebody in Vietnam wants to pay somebody in Laos and we're no no one American is within 10,000 miles of the thing we've somehow had an ability to get involved and disrupt that and we are in danger of losing that by the way if we have our own digital one that won't do any digital dollar digital anything venmo national venmo whatever the hell it is it will do nothing to interfere one wit with the ability of others so we have a choice yes we can and I yield to my national security colleagues here we can try to apply such severe threats to the Chinese that they're not going to try to establish some kind of venmo that will enable people in Asia to trade with each other we can try that I suspect we have to bring enormous coercive pressure to get them to accept that that it would be a huge loss of face for them if they did accept it and that the risk of being that confrontational with them would surely destroy any chance that they would cooperate with us on North Korea and quite likely would set us irrevocably on the path of the vice-president fears towards an entirely splintered world excellent point and just to remind you over the last two years we've seen a transition to those Chinese payment platforms based on some of the social media communication platforms that they develop in power I first going to go to the Secretary of Defense with all due respect and then I want to get the perspective of our US ambassador to China is for some reason in person here today in the situation to take full advantage of that okay yes go ahead secretary state you do get to try to secretary Carter let's try to pull some of these things together for the president I I think what we're all hearing here is that internally this digital currency doesn't make any difference in China material it may add some convenience to a repressive machinery that pre-existed and with recent but so internally it doesn't matter much externally the external world is in play and there it is having a what to me is an undeserved effect of weakening of increasing the Chinese economic power and weakening our own economic power I say it unnecessary because I don't think there's anything logical that connects a digital currency to the replacement of us in the Swift system but there is something psychological and we have to take that seriously encounter it and I think that the way of doing that or an important way of doing that is not to confront the Chinese and so forth but I think we have to stick up for the integrity of the system that we have backed by for a long time I think much of the world's economy supports that for a very good reason there's no particular reason for them to go for the Chinese alternative now and remember the Chinese get a lot of mileage out of false brands they do with a belton Road this is the country that builds cities with no people in them and they're capable of building citizens with no followers in them as well so I think we have to get in the external game and combat this because this is a tool and this is an example of the the fact that even though it's not a world split into as the secretary of the Treasury rightly points out that's not entirely our choice China's half of Asia we want the other half with us and not if it comes to that and at least not aligned against us we want the rest of the world that way and we need to play the game that's on the on the field and that is a reason why I think that we need to think about our own countermoves in this area and the president does and we also need to do something to kind of debunk the momentum that this thing's getting right I remember one of my professors at the Kennedy School said you can't go on defense unless you have offense so we're transitioning out to the Secretary of State very quickly only because the Vice President I have a drop dead to talk to the president within one hour and we need to make sure that we get all through this so well mr. secretary and then I'm gonna go to ambassador Rice certainly I'd like to be part of that phone call at this time it's just to tell you why the vice president since you've already been making your president because and I and rightly so as the vicar of the president's foreign policy right we're better as a team if we work together mr. secretary look we're in we're in real jeopardy here and it seems to me we've got to push through a lot of this analysis towards tactics right now and recommendations the president's going to have to approach you Jinping we're in jeopardy because every previous president the last three meant two things going for the ability of threatened force against North Korea that's the Chinese know that and sanctions implement them if sanctions is off the table temporarily we've got to find other pressure points on the Chinese leadership I don't know if it's the commercial banks we have to think through this but the president we can set up the calls and we can get the Japanese and South Koreans to be involved but the president's gonna have to make this case so that sounds good my recommendation is to engage the options part of the agenda we'll work through those will capture those will pass those on to the president and then give you the thumbs up to do that ambassador Verma you're there in China talk to us a little bit about what you're seeing the Chinese strategic perspective on digital currency their payment platforms what they're doing in FinTech how does this all look from the strategic perspective and the tight end North Korea yeah no I appreciate in here as you know I'm not a career diplomat I am a banker and industrialist by by training and I have to know a lot about this okay and I have been enormous ly successful in the in the private sector so it should not surprise you that I've been enormous ly successful in Beijing in fact since I've been on the ground relations have never been stronger between the u.s. in China and these are interesting meetings that you that you have here if I was to do this in my business we would have gone under years ago stock this much so you can only hope to be National Security Advisor someday so look I think we're on it I think we're on a dangerous course here because the choices I here are very much headed towards confrontation and I would encourage this team to think more about cooperation and I associate myself with what the Secretary of Treasury has said and I think we should proceed with great caution try to de-escalate and as you said rightly there is a financial technology revolution taking place and we are about to miss it and we can fault the Chinese for getting there ahead of us but we could also try to partner with them and join them in some way and I'll just remind you Christine Lagarde said we should consider the possibility of rolling out a digital currency Mark Carney said we should consider joining forces to create a virtual currency we're upset in this room because they got there ahead of us my recommendation is that we not try to quash this effort but we in fact try to get on board and even look for ways to partner with the Chinese government that's the best way to ensure we maintain good relations and get the leverage we need on the North Korea question this is exactly what I committed to the president when I called her on my cell phone the other day from a cafe in Beijing she was she was coming in so loud and clear I had to hold the handset away from face and I believe this is the best way forward ok mr. ambassador you sound like you may have already spent too much time in China breaking news out of Brussels this evening a cyber attack on Swift the Society for worldwide interbank financial telecommunication has resulted in the theft of 3 billion dollars from commercial banks based in Germany Saudi Arabia and the UAE Swift is a global messaging system which banks used to share payments instructions early reports says suggest that the attackers exploited vulnerabilities to gain control of member bank's legitimate Swift credentials attackers used those credentials to send Swift funds transfer requests to other banks which trusting the messages to be legitimate then sent funds to accounts controlled by the attackers these are the latest in a string of attacks on the Swift Network including the high-profile 2016 attack that resulted in a massive theft from the Bangladesh central bank authorities say it is too early to tell who perpetrated the attack and investigations are ongoing for more on this we go live to both okay we have just got new information intelligence about the Swift attack we had preliminary information as you all know from your briefings prior to the meeting but at this point I would like to turn it over to the deputy national security adviser to provide you more information about what we just have received in terms of intelligence about this attack which has resulted in the theft of three billion dollars from commercial banks based in Germany Saudi Arabia and the UAE our intelligence agencies assess with moderate confidence that North Korea is behind the attack potentially with an aim to drive more users to the digital yuan system at the broader strategic level the PBOC has been presenting its digital currency infrastructure as an alternative to Swift referring to the traditional payment system as outdated and highly vulnerable to security threats over two years ago in 2019 PBOC s deputy director of payments said the digital yuan is open for external connection we are developing it for our trade partners if they want to join this work is already ongoing and test connections already exist Chinese authorities claim that the digital yuan infrastructure is fully portable countries can create different instances of the system selecting their own banks and payments providers as network participants and releasing digital forms of their local currencies in Russia for example the central bank as well as the largest Russian commercial banks Farah Bank BTC btv excuse me gas from Bank and so on could be added as nodes to create a Russian instance with a digital ruble all nodes within the system then be able to clear and settle payments in real time including cross-border transactions we have been tracking that Russia Turkey and Pakistan have been in talks with the Chinese to develop this system and adopt their competing system for their own digital currencies over the past year we don't yet know if the three impacted countries Germany Saudi Arabia and UAE will also consider connecting to the Chinese system so it's as if the North Koreans were reading the tea leaves on some of the things that you had made comments about regarding the vulnerability the Swift system our use of it in the past perhaps driving others there so I'd like to ask the DNI again how is the Swift system important to US national security interests let's just get back at that and then what we're gonna do is we're gonna move right to the options generation stage what to do about this will this hack on Swift Drive more of these countries to a swift alternative instances of the Chinese system what should we do about that how does that limit our leverage but let's start with the DNI what's your assessment of what this attack could do to driving another towards Swift and how much does that matter let's just remember it's a messaging system so they don't they're not a bang they don't extend credit they don't provide financial services their function is really to provide the language that banks use to move money around the world they are by far the largest provider of that language even if there is a competitor out there so at this point we don't have a bifurcation could a breach or additional breaches drive people out of Swift absolutely but we're also at risk of doing that every time we use Swift to cut off banks to weaponize Swift as you've mentioned it it provides an incentive for the creation of these other other systems I think it's important because it is a standardized messaging system they require robust information attached to these transactions I think the United States you know we agree that that that's very necessary to help thanks detective listed activity so that that is an attribute of Swift and we also have have had some important programs with Swift they gave us information to support investigations such as the terrorist financing tracking program which we use with slip to investigate terrorist financing so it's an important platform correct okay yes vice president before we move to options sure but maybe for the DNI or possibly for the deputy national security adviser we've been talking about cooperating with China in the face of these challenges and threats and now we hear of this attack is it conceivable that North Korea could organize this attack without the assistance of the Chinese or should we see this for what it probably is which is a Chinese attack on the Swift system but as you know madam vice president the North Korean cyber operators and cyber army has been very active and attacking the Swift system as mentioned in your intelligence reports the attacked on Swift at the Bangladeshi central bank almost resulted in the theft of a billion dollars if not for very small mistakes that the North Korean cyber operators made in Miss typing data entries going to the New York Fed there's something that they've been very active in doing hitting crypto banks so you can see what's in the interests of both the North Koreans to drive people to the Chinese alternative and probably coincidentally in the Chinese interest that that happens although it seems from my personal perspective unlikely the Chinese would be involved in an attack like this against someone like the Saudis or the Germans but I don't know if you agree with that North Koreans the the cyber attack is very similar to the one that we saw in in the bottle of aja Tata so at this point I was just kind of we're gonna move to the options generation stage because of the call that we have with the president madam vice president what I'd like to start is with our digital currencies are and let's talk about the idea that some of the members of the cabinet have already proposed is that we need an alternative we need our own option as a digital currency as you know way back in 2019 Facebook proposed this crazy idea of Libra and that possibly being the alternative of a crypto currency backed by US dollars in a basket of other currencies including the one could you talk to us a little bit about that is is Libra the answer in the state that it is right now and what should the u.s. do from your perspective well what I'm a little bit worried about right now is what I'm hearing around this table is that everyone's okay with the status quo and I think you know given what we've just seen happening with sweat we have to come to terms with the fact that US electronic transaction systems have not evolved fast enough to keep pace with the demand for retail online digital payments and more sophisticated types of financial transactions and they also haven't evolved fast enough to say to stay secure in this increasingly digital world where you know our enemies cyber tactics are becoming more and more advanced so the old system just isn't cutting it anymore and unfortunately the trajectory of that is that it's just gonna keep on getting worse and worse and worse and so yes we see China with the one but you know the competitiveness of the US dollar is a matter of national security and we have to take this seriously and continue to innovate today in 2021 we are still in a place where the US dollar is the world's reserve currency the US dollar has incredible importance and it allows us to enact monetary policy and to weaponize Swift as Gary put it however that could change if suddenly another currency becomes more interesting and more viable so we have to keep pace with this innovation so to summarize Libra and and how it worked back in 2019 it's a basket of bank deposits and other short-term government securities it's stable it's governed by something called the Libra Association which is a consortium of private companies across a certain number yes they're still if you left you gonna ask secretary Carter later how much he trusts Mark Zuckerberg handling the US equivalent of a digital currency go ahead I will say I agree with the secretary so you know it does not make sense to to put our nation's transaction systems in the hands of a private company however that does not mean that we should not move forward and that we should not consider a public/private partnership in order to innovate in order to get our transaction systems up to the level where they can compete on the global stage have any of you actually used WeChat or Ali pay they're amazing you can pay for everything it's seamless it's easy you can make micro payments we just don't have that in 2021 in the United States we are lagging behind you sound like you've been hanging out with our ambassador quite a bit over in China and very quickly just so I can get to the secretary of the Treasury and Secretary of Defense so I think we do need to explore this public-private partnership one thing that is of the utmost importance is thinking about privacy and this is something that Libra really got wrong everything is out in the open everything is public all transactions they don't put actual user identities out there on the blockchain they use encoded numbers instead but that is easily traceable easily mine abble and I think it really speaks to you know who are this design to take privacy very seriously now you might say hey we would like to use these transaction systems in order to find illicit activity to find criminals however I think that that can be done while considering privacy and security we went through a similar debate around HTTPS which is the protocol that is used to secure today's web now at the time it seemed inconceivable to allow user web activity to be encrypted and outside of the surveillance apparatus but now 81% of government websites use HTTPS I think we have to think about technologies like this we have to think about privacy and we need a public-private partnership in the spirit of what we did with ARPANET and the Internet in order to move this forward okay testing that we can't do this alone as the US government that we don't have the ability it's exactly the question which a secretary the Treasury secretary Summers does Treasury have the capability and technical know-how to successfully implement a digital dollar let me just say this is not a Kennedy School exercise for us that's right we've got a half of 40 people who've been working on this for a long time who have extensive experience with the relevant interconnection okay so just answer the answer is yes the answer the answer is that the Swift system is an interbank system you cannot meaningfully work on an interbank system without working with the private sector and I spoke with Jamie Dimon three months ago there's a team of people that he's pulled together from the six major financial institutions in the United States along with a number re think and a number of the asset managers who are working with and in agency team at the Fed at the Treasury the controller of the currency to get this right we right now we have one network that doesn't work very well the worst idea in the world would be to now try to have two Swift and some other separate cyber project we have this under control we've got a public sector led team with the relevant private sector actors that is hardening Swift and a hard Swift that will be secure has to be our first priority okay we don't need to worry about the dollar look let's let's be honest here in the Situation Room Europe's a museum Japan's a nursing home and China's a jail and we don't need to worry about those currencies being some kind of major threat to us okay no the president when can we make this happen if it's a real option we'll think about and we will have a new hardened currency swift system ready to roll out six months from today today are you willing of it are you willing to bet your job on it I'm willing to know our president whether you build on it that we will have such a system in place frankly there is one thing that we will need our efforts have been substantially impaired by the currency czars calling and giving contradictory instructions to their people we're speaking with and so if you give us responsibility will deliver it's right now as always we'll see what all due respect mr. secretary the White House is in charge as a direct staffer to the president well let you fellas our contrived this currencies Ark and our Kennedy school friend right so good team spirit thank you very much can try to deliver rice currents so we we have one of the options on the table is to develop a US version of digital currency either possibly alone although that sounds hard or as a public-private partnership I want to think about other options though to try to get at the issue of North Korea let's not forget what it is we're trying to focus on here and not just the shiny ball of a digital currency mr. secretary do you have a of course are you suggesting that the u.s. create our own digital currency or just that we work on Swift we stick to our current system but make Swift less vulnerable to cyber threats we need to make a skewer swift look swift is digital it's all binary it's all electronic communications so there's a question about what the definition what we mean by that but my proposal is that we harden Swift that we commit with respect to avoid what other see countries see as abuse of Swift and that we make clear that where there are Swift transactions involving North Korea or involving other rogue nations we will use the leverage associated with Swift but secondary sanctions on those who are engaged in transactions and commerce that does not involve rogue nations we will not seek to interfere okay unless we make a pledge of that kind but so you're likely to lose the integrity so of Swift if I can try to clarify real quick that sounds like a major policy change for the US government that we're going to commit to not implementing secondary sanctions so we'll propose that to the president from the Secretary of Treasury hardening Swift but that is different than the proposal from our currencies are on proposing a digital currency as a joint public partnership so we have three distinct options right this point i'd like to turn to the Secretary of State if I could mr. secretary thank you very much from a diplomatic perspective Eric we need to form a coalition the Japanese and South Koreans need to be part this is on North Korea and on China Japanese and South Koreans have to be charter members and the European Union the big mistake that president Trump made after his ninth individual meeting with Kim Jong on which took place in Stockholm is he got nothing and the EU is not a competitor that you use our strongest global partner bringing the EU into that number one number two in the short term you do have a lot of Southeast Asian countries who are attracted by this Chinese central bank digital currency we need a major campaign I think it's State Treasury led to go around those capitals and convince them this is not in their interest I think we can convince Pakistan in Turkey can I put you on that sorry in Rome mr. secretary we convinced them but but what are we offering the Chinese are bringing investment they're bringing the beltro they're offering better technology in terms of the competitive systems within what what do we bring and to convince some of that is it poison the ambassador how are we going to do that yeah and the problem is that President Trump did nothing right for years on this so we've got luckily that's in the past looking forward how do we how do we convince them we've got to take the build act which was actually one of the best things the Trump administration day with Congress and we've got a we've got to expand that three or four times but in the short term it's a largely defensive mission that Treasury and state need to undertake to warn these countries of the perils frankly I'd let Russia sell its future the Chinese if that's what they want to do is mountain the Russian national interest last let me just say I think when the President does have this phone call it has to happen the next 24 hours with Xi Jinping he's got to be tough minded the Chinese have created a major problem for us ash and I have talked about it on North Korea if the Chinese want us to go down a military options road they've opened the door to that we've got to convince the Chinese and the president has to do it to go back with us and develop some sanctions and some pressure some leverage on North Korea finally I think Larry and Gary and Neha if you can develop some cash city in the united states to have our own currency a digital currency that's going to give us the leverage longer-term that we're gonna need mr. secretary if I could just say I know you're my boss and so this is gonna be hard for me to say you don't report through mine I just remind you of that investment I will say we the the president wanted the ambassador at the table go ahead miss West we are we are trudging down some old paths here and we are dividing ourselves into what it's become this bifurcated world that the vice-president was warning about and we tend to think of the only things that are provocative to the Chinese is our naval forces or military exercises but if we build the kind of system we're talking about and have even a stronger dollar denominated a global currency system whether it's electronic or digital it'll be even more provocative and we will be in a longer death struggle with the Chinese I would argue that we revisit the g2 concept that we had talked about in the early days of the Obama administration the European ambassador you've done a great job with the cocktail parties in Beijing I'd like to hear from secretary Carter secretary Carter you you always have some thoughts about the Chinese and whether we should be concerned about provoking them what are your thoughts it's getting too late in the meeting did that offer my own ideas our proposal we try to summarize if I can so that you can help you to summarize for the president where we are I think we had the broad proposal came in several different flavors that we can't let stand the Chinese using this currency issue as a way of making inroads into what has traditionally been a strength of ours and we had a proposal that to do to counter it in some way replication maybe a piece of a counter it may be something involving Swift since one of the things we get out of our dominance of Swift is the ability to conduct secondary sanctions and they have been a benefit of ours I don't want to give them up in in in order to preserve the system be fair to say that you disagree with the secretary of the Treasury well I think he too wanted to have a counter so I think you've got a school of thought that was we can't let this stand and we need to have a counter now and that counter needs to constitute he needs to be a sticking up for the American role in the international financial system I only say that because there was another point of view which I respect though I don't share which is a sort of a mortgage it to move where you try to counter Chinese strength by associating yourself with them I think personally that that's a weak move and I don't recommend it but you heard it from one of his advisers and that's what it ends up being I think he if I were he if I were in your shoes I would recommend that he or she choose the first basket and ask us to come back with an elaboration including the this resolving the ok debate between people who like to sign dollar bills into people this will be one of the issues that when we have the full NSE with the president that we will have this debate to discuss that and we'll frame it up as an option to make sure when we have that meeting that we also have it in the context of the US and understanding that while we may try to shore up our financial dominance we may also well be moving into a world where we are not financially dominant and that is what we are discussing right here we are in a world we may already be in a world where we're not financially dominant certainly not in every sphere and so we have to think about what do we do the rest of our foreign policy tools I'm surprised not to hear the Secretary of Defense saying he needs more support for his military military action is going to be one of the tools that we are going to reach for more consistent well take that to madam vice president that's the heart scarcely does anything about a Chinese curry well I think operations as well yes madam I spent a just to remind the cabinet what I really need to take to the president are options to inhibit North Koreans ability to develop their missile program over the next 18 months so I'm gonna go to the Secretary of State first very quick action yes well we can work on a finding so well I respect this Secretary of Treasury says we should harden Swift I frankly don't think that's gonna address the real policy and we're losing the tools sorry to say this secretary quarter we're losing the tools if we keep using Swift for secondary sanctions and and on this but they've got a lot of good use out of the meantime absolutely but I think the runway is shortening I think it just you just it's just shortening and we've seen this right here in this circumstance that North Korea could have evaded sanctions as the Secretary of Treasury said just because they can move things across the border but this new competition is Swift is real so I concur that we should back away from secondary sanctions and we also have to realize we have to stiffen up other tools because Swift we're in the waning days of this political geopolitical tool secondly as the currency director said czar czarina excuse me currency director said is we have been leapfrogged by others by digital currency by digital Chinese currency why because frankly our central bank has been slow and there's appointment coming in January of 22 the president's got to decide whether to change over who's leading the Federal Reserve whether we need some new leadership there that can move us both domestically and internationally so that we can really be feeding actively that our US currency system it's it's under the Secretary of Treasury but the Federal Reserve runs our payment system I think we need to move that Federal Reserve into the modern era okay so those would be my recommendations so I'm gonna go to the Director of National Intelligence and then just to give you a heads up I'm gonna go to each of the primary cabinet members and of course you madam vice president for your final thoughts that will report back to the president but we have a call in about ten minutes so we're gonna have to wrap it up quickly please I think and that's what is gonna sort of replace the Chinese currency but I also agree with you I'm Secretary of State that we should be having a joint delegation and Treasury State delegation and the D and I would love to be part of that delegation to go and raise concerns about the Chinese digital currency and the types of activities it's being used for I think people have to be confronted with that including private sector actors I disagree with the secretary the Treasury about the importance of the private sector sort of awareness of that instance and I think that's what we should be leading with so the DNI will collect all the information we have about how this occurrence has been used and we want to bring that to light the people that we're talking to you okay great madam vice president would you like to go first or in conclusion after hearing about last word okay thank you so mr. secretary secretary Carter I might start with you first what are your final one-minute thoughts for the president III think it's a yeomen North Korea subject yes it's all been said it's been summed up by the Secretary of State that is our best diplomatic move the military moves remain what they are they're very undesirable success and the digital than the diplomatic side does as it always has in Japan China which is another reason to make a deft move with respect to China in the other areas over both of these parts of you of today's meeting go back to China and to my way of thinking they go back to a strategy not of pure confrontation but if active sticking up for hours and that may be in part replicating what they're doing but ifs I don't think it can be confined to that and that's where the President on the land secretary summers then I'll go to you secretary burns and to the vice president three pieces we've got public sector private sector team now working on hardening Swift if there should be some digital component that's separate from the currents Swift system that can be part of what that team works on but we are well down the field and we need to build on the momentum of that project second we need to enter into a different kind of dialogue with China than we've had and I hope we'll have several principles meetings before long discussing our overall strategic relationship with China because everything about what we're able to do with North Korea how we're able to sanction North Korea or not sanction North Korea what we're able to do with money depends upon what we can do in our overall relationship with with China third we need a strategy now that focuses on those transactions that involve North Korea itself and we need to mobilize every bit of electronic intelligence we have directed at using the most sophisticated techniques we have to track transactions involving North Korean entities and with respect to those entities we need to go after them hard and if we do that we will have the whole world with us if we are not careful we will alienate the whole world from using our kinds of money and drive them towards alternatives just like with respect to weapons with respect to sanctions sometimes you have to be very precise in your targeting if you want to maximize your effectiveness okay D a knife a like an NSA get inside the new Chinese version of Swift I'm sure you can you don't answer that here okay secretary Burns Eric we gave you the three options for the further president what we need to do diplomatic Lee I think the State and Defense Department's are united on that and you could tell the president that second the president's got to tell Xi Jinping that North Korea's nuclear weapons future is a core issue for the United States Chinese like to talk about their core issues Taiwan and others this is it for us the Chinese have created a problem for us by taking away our sanctions leverage they need to help us resolve it so it's a hard-nosed phone call as opposed to the suggestion made by our estimable okay ambassador and you would you would prep a call with the Chinese foreign minister to make sure that President Xi was not with the foreign minister who really doesn't have a lot of power but with young you're sure that state councilor okay it's a form of foreign is yes third Jack Lew warned us in 2016 that were over relying on sanctions coming home to roost now fourth I think we're we need a boldness and the creativity is on the economic side to think about defining leverage what's the new leverage of the United States we got to work on that as a cabinet okay thank you mr. secretary madam vice president concluding comments great thank you for this meeting which has been very surprising surprisingly effective first on North Korea I think secretary burns laid it out very clearly a pretty straightforward path I would like us to be in a position to be more credible when the president says to Xi Jinping that we have other tools which we would be forced to use and so again I would look to the Secretary of Defense for maybe something we could do to suggest that we are serious about deploying other tools on the larger issue I do think that having a strategy to resuscitate our financial prowess is absolutely critical there I take very seriously the Secretary of Treasury suggestion about really forgoing secondary sanctions I think that's something we need to look at at the same time we do need to look at it our own digital currency I'd also like us to do some contingency planning what how do we wield American power in a world where we are not financially dominant I think we we just were behind the curve on that and I look to you as national security adviser to really get our government thinking about that and in a smaller sense we need to think about particular issues that could unfold in the days of head what if tomorrow what if our next you know jane pearl is and that guy David Sanger who I think we should get in here as part of the national security team he basically sits inside the sit room and reports out anyway so yeah I'm happy to hear that I like him we need like what about in five minutes if we hear that the world is trading oil in this digital you want what does that do to our economy I think we really have to ask some of these questions so we don't have to wait three or four days for you to call a meeting every time something important happens thank you advice taken madam vice president I know secretary Carter will be particularly enthusiastic about two to three pcs per day for the next several weeks it's not like he has a department of three million people and seven hundred billion dollars to run right mr. secretary yeah I don't want anybody to get me wrong about the money thing my president I just wasn't prioritized my but I'll take it okay so here is the way that I'm gonna summarize what I will read out to the president along with you madam vice president first / the Secretary of State's recommendation that there will be a POTUS call to President Xi we're going to talk about new avenues for cooperation somewhat in the spirit of the Ambassador from China to have them help us stop using the half of the North Korean stop using the digital wand for some of theirs make sure they understand that if there's a threat to the United States from the North Korean missile program and they have been part of that knowing or otherwise that carries grave strategic consequences for our relationship the Secretary of Defense will follow up with military options that we may talk to the president G about the structure state mentioned diplomatic efforts to build up things like the build act we'll talk to the president about that also as we heard from the secretary of the Treasury and are very effective new cyber currencies are we need a strategy to 1 modernize our Swift system I think the the word was hardened from cyber attack from the North Koreans in particular but we need to develop and present options to the president for a u.s. equivalent of a digital currency either a private public partnership or if the Treasury is able to do it with fed something that would be a public only option and we'll have both the secretary of the Treasury and the crypto czar follow up on that and as we mentioned from the vice president and the Secretary of State we need a strategy to resuscitate us financial prowess I think is the way you put it madam vice president and examine this idea of secretary sanctions and weather and the overuse of them we've actually undermined our ability to use them down the road so unless I hear otherwise from the cabinet that's what I'll read out to the president when we have the full NSC you all of course will present your own perspective on these things your staffs can bring new options to the table please mr. secretary no calls of the president until we've had the ability to meet all together will be better as a team does that all sound fine to you thank you very much okay and the meeting is adjourned [Applause] okay great so in the military language you say that's end X end of exercise and we go back into our real-world personas so before we're gonna take some time for a Q&A from the audience and you all know how that works in the forum before that though I just wanted to say very quick thank you to you see all of the students who are here staffing the people up the table over over the last over the last several months the students working with Aditi have put together all this material and when you think about everything that you just saw in the last hour and a half there's probably 300 hours of research memo development slides getting David Sanger to do an interview doing all of that with the support or during a table getting the seal all that they've done a really great job so if you can help me give the students around with laws that would be great also Sara Donahue who is the director of operations for the Belfer Center has done an amazing amount of work Sara if you're here I could stand up really quick thank you I mean just finding like a red phone alone is like yeah I don't know if they have still have phones like that also I just want to say a quick word this is a lot of oddities ideas and she over the last three weeks in particulars been working like 20 hours a day to get all put together so good job Adi okay here's what we want to do I know I'll get the hook from the forum staff here pretty soon but you know how the forum works if you have a question and you want to line up where the microphones are I don't actually see my set okay there's a mic there and there's a mic there if you have a question about anything that happen in the simulation about this issue at a strategic level please feel free to go up to the mic and if not then it might be one of the first forums ever where we either four people out or they didn't have enough advance time for questions no okay I can't see anyone else all right anyone question yes sir okay all right go ahead there's the brave soul go ahead just remember this how it works in the forum here just tell us who you are where you're from very briefly it's a question that means a question mark at the end not a paragraph in four or five sentences my name is Noah I found out about us on Facebook so there was a little bit of interpersonal heated dialogue especially around like the currencies are versus the Secretary of Treasury how much how much does that sort of happen in a situation like this and how much if it's sort of hashed out before you walk here in the room maybe maybe I'll answer having observed and from the back seats of a lot of principal committee meetings you'd be surprised the degree to which principals do get together but also defend their turf so secretary summers was doing a good job role-playing what would be perceived as a threat to Treasury's space in a way but may have you know of course is very smart so I think all that was pretty realistic maybe a little hyperbole the dramatic effects but I was entirely being faithful to how an actual secretary of the Treasury would be in terms of how they felt about this initiative I was over doing it in theatrical elements but only Larry Summers can in the way I in the way I described it and stated it but the the moment when I at the moment when I said I've talked to Jamie Dimon four months ago and we've had a team going and sought to leave the impression that newly appointed White House czar was amateur hour that that basic bureaucratic strategy was an absolute standard but does not reflect anything about the true intellect and capability of the cyber czar okay there's there's one other question behind you and then we'll just wrap it up go ahead please I I have a question about the TPP trans-pacific partnership I know our previous administration spent great effort to put putting that forward but now I think from our administration I see lack of interest of that and I see China sees that as a very good very big spread so I just want to see what your view about that okay secretary burns once you take that one I think disavowing TPP at the beginning of 2017 was one of the most consequential mistakes the president has made I think a new president whoever he or she is and if it happens is going to have to tread a little gingerly because time has moved on these countries are arranging things themselves I think we ought to have a broad-based indo-pacific trade strategy we've also added trade grouping excuse me because that's the way to leverage China and India the two problems in the indo-pacific we have to also be aligned with the largest economy in the world the 29 members of the EU so I would say in a new administration a new architecture for global trade and resuscitating the multilateral trade system is a vital step in the first few months of any administration right okay thank you very much so in conclusion remember the reason you do a simulation like this is to project forward on an issue that hasn't happened you do some analysis try to see where it could be and simulate the way that people would have to generate options in response to a crisis tied to something like this I think that has a lot to do with the new project that Aditi Larry and Nick have put together with the new economic diplomacy initiative and of course what we want to do since we're at the Kennedy School is have students there's so many in the audience both understand an issue in which they could have impact down the road but also get a little glimpse of professional skills by people who literally have been the secretary of the Treasury or the deputy national security advisor or the undersecretary for political affairs or Secretary of Defense or ambassador to India or other very senior positions and people who are smart on it so we hope that you enjoyed that learn something from it and thank all of you and all of you participants for investing so much time in it thanks [Applause]

Channel: Harvard Kennedy School's Institute of Politics

Views: 10,194

Rating: 4.7319589 out of 5

Keywords: Harvard Institute of Politics, Harvard University

Id: zNP-HPiwR-M

Length: 91min 31sec (5491 seconds)

Published: Tue Nov 19 2019

Reddit Comments

[u/Febos]

Europe is a museum, Japan is nursing home and China is a jail.

[u/[deleted]]

Tell them about Monero, they got ready to use product.

[u/Cryptonote-Social]

Pretty great analogy. Who is that who was saying it?

[u/bawdyanarchist]

I can't believe Im watching top level bureaucrats and politicians. The leader is acting like an adult. The girl who talked about crypto was rational and well spoken. And then like, 3 other characters there looked like children, amateurs. And they are in charge of massive sectors of the govt. Smh