I am happy to have the opportunity to return to and to speak in Dakar. Not far from here, I began my unexpected journey into the economics profession. As a graduate student at l'Université Cheikh Anta Diop de Dakar, I came to study philosophy and to write a thesis in African philosophy. However, I immediately started posing questions that became foundational in my conversion to economics, which would help provide the framework and skills to respond to these questions. Among them were the following: Why did a ballpoint pen that cost $0.10, at that time, in the United States cost the equivalent of $10 in Senegal? Why were some countries rich and some poor? Is there ultimately convergence among economies and one path to economic development and higher standards of living? Questions like these ignited my interest in understanding how the economy and monetary policy affect people's lives.
I have been lucky enough to return to Africa many times. That included working in Rwanda and East Africa in the late 1990s and early 2000s, where M-Pesa, a mobile phone–based money transfer service, and other innovations piqued my interest in technologies that facilitate faster movement of capital and payments. I feel very fortunate to return to Dakar today, after many years, and to engage with an issue that is having a notable effect on the global financial system: tokenization in financial markets. Tokenization could specifically offer compelling benefits in West Africa and other emerging economies, including potentially faster cross-border payments and better access to capital markets.
More broadly, tokenization could facilitate improvements upon frictions in financial markets today, with purported benefits ranging from improvements in settlement times, as well as enhanced recordkeeping and automation, to new ways of using traditional assets. This potential warrants careful consideration of the innovation's opportunities and challenges, particularly from a central bank perspective. If you will indulge me, three dimensions of tokenization will be my focus today: I will more deeply explore (1) the opportunities tokenization could provide, (2) financial-stability considerations and potential challenges should the innovation scale, and (3) the Fed's role with respect to tokenization and digital assets more broadly.