DATE: 28 October 2016 1 By On Time Transcribers

FLW 1 REFLECTIONS ON SYSTEM D JAMILAH WELCH & K WILSON

J WELCH: [0:00:08] Greetings. I’m Jamilah Welch, Associate Director at the Institute for

Business in the Global Context here at the Fletcher School and I’m here with Professor Kim

Wilson. Hi Kim how are you doing?

K WILSON: [0:00:17] I’m doing great. It’s great to be here Jamilah.

J WELCH: [0:00:20] It is great to be here. So what do you have in store for us today?

K WILSON: [0:00:23] Well, actually I have a quiz for you.

J WELCH: [0:00:27] For me?

K WILSON: [0:00:28] Yes.

J WELCH: [0:00:29] Okay. A quiz already?

K WILSON: [0:00:31] Already, did you do the reading?

J WELCH: [0:00:32] I had not necessarily done the reading…

K WILSON: [0:00:35] Alright, let’s try it.

J WELCH: [0:00:37] But yeah, I’m excited to try.

K WILSON: [0:00:38] Look at this photo that we have for you.

J WELCH: [0:00:41] Okay.

K WILSON: [0:00:42] And what do you see?

J WELCH: It’s a circle.

K WILSON: [0:00:48] Ok. Keep going.

J WELCH: [0:00:50] Is it like a… some sort of a shield?

K WILSON: [0:00:55] No.

J WELCH: [0:00:57] Is it like a mill stone maybe, like its grinds things?

K WILSON: [0:01:00] Keep going.

J WELCH: [0:01:02] It’s a wheel?

K WILSON: [0:01:06] No. But here’s a hint. This is about digital money.

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DATE: 28 October 2016 2 By On Time Transcribers

FLW 1 REFLECTIONS ON SYSTEM D JAMILAH WELCH & K WILSON

J WELCH: [0:01:10] This is about digital money?

K WILSON: [0:01:13] Well not exactly. What you are looking at is, actually all money is digital,

because it’s in units, but I think when we’re talking about digital money, we’re talking about

electronic money and obviously this isn’t electronic money. But, actually it is stone money from

the Island of Yap.

J WELCH: [0:01:31] Fascinating. Island of Yap, now where is the Island of Yap? I have never

heard of this place.

K WILSON: [0:01:35] Well as you can see it’s in the middle of the Pacific. It’s very far away

and they used to import these big wheel as forms of money. And what is interesting about this

particular kind of money is that its value increased not just by how big it was, or who made it, or

how artistic it was, but who owned it… did an important sailor bring it in? All of this was

embedded in oral history and it would increase the value of the money. In fact, one of the

canoes tipped over, released the money and one of these big discs fell straight to the bottom of

the ocean, but because enough people had seen that happen, it served as a form of money still,

and it had a great deal of value.

J WELCH: [0:02:26] Wow, so these are huge stones and people are just using this based on

belief?

K WILSON: [0:02:33] Yes and if you think about, it’s just like something that is very current in

our lives, which is Bitcoin. This kind of money uses what you could call a public ledger, right?

It’s agreed upon through oral history and in Bitcoin it is the same thing - you are using a public

ledger that is called a Blockchain. So they’re not that dissimilar, so some of these principles,

principles around money, have been happening for a very long time.

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DATE: 28 October 2016 3 By On Time Transcribers

FLW 1 REFLECTIONS ON SYSTEM D JAMILAH WELCH & K WILSON

J WELCH: [0:03:02] Fascinating. So you’re saying that these stones are very much like a

Bitcoin and that they are a type of money, but maybe not a formal currency, maybe not

controlled by a Central Bank?

K WILSON: [0:03:12] Exactly. They are distributed. Which brings me to another point. I think

when you say the words ‘formal’ and ‘supervised’, everybody thinks that that’s really what

money is, but actually it is a lot more than that. It’s imbued with a kind of value that we give it

that is more than its storage or as a medium of exchange. So I think the words formal or

informal, digital or not digital really don’t serve us well anymore, that we have a notion of value

that goes far beyond whether something is supervised. How come people aren’t using it more

than we thought that they would? A lot of accounts are lying empty. And I think part of the

explanation might be that we’re not honoring something called system D actually.

J WELCH: [0:0:04:06] What is system D?

K WILSON: [0:04:08] Well it’s actually, I am going to massacre French right now: Système D

and it stands for débrouille and it’s really a celebration of all things clever and ingenious. The

French would say “bricolage” : coping, putting things together, patchwork and system D is very

alive and well, even around something like digital money or financial services.

J WELCH: [0:04:38] So you’ve talked about these stones? Could you give me an example of

a system D thing that’s not ancient?

K WILSON: [0:04:46] Sure, you’re saying make it a little more relevant. Yes, so a few years

ago I was in Cabera, a city within Nairobi, a slum city which was very poor. You may have been

there. And I was speaking to an ingenious young man who had a number of savings clubs he

was working with and the question was: How could they use banking services and the M-Pesa

service, which has become wildly popular? How could they use that for their club? The idea was

that individuals could access an account -but how do you do it as a group and how do you keep

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DATE: 28 October 2016 4 By On Time Transcribers

FLW 1 REFLECTIONS ON SYSTEM D JAMILAH WELCH & K WILSON

somebody from running away with all the money? So if you and I are in the same club how do I

make sure that we have access to our funds but you’re not running off with it. So very

ingeniously, they figured out that the principal officers which were the President, the Secretary,

the Treasurer and the Vice-President, each would memorize one number of a pin code and then

they would punch it in secretly in order that they could preserve some kind of security for that

account. I wrote a piece about that and the international agency Care and Aga Khan Foundation

picked up on this idea that this gentleman, Stanley Lucas, had come up with and it spread. But

it was basically local ingenuity that made it happen.

J WELCH: [0:06:21] Most of the time when I hear about financial inclusion, it’s about including

people in a formal system, or at least a digital system. What you are talking about is kind of

making a problem, or solving a problem. The two seem maybe like they are not exactly the

same thing. Am I hearing you correctly?

K WILSON: [0:06:37] I think you are and I can see this field of digital money as a route to

financial inclusion, perhaps shifting a bit. I know at the Fletcher School we define it differently

than maybe you’re used to hearing in the industry. So, I think industry wide, if you look at the

G20 or the definitions coming out of the World Bank, IMF, they’re talking more about formal

services, formal kinds of financial inclusion and I think this is a supply side view. It doesn’t look

at the user and say, what does that person need and want, and how are they managing their

money lives now? And how can they make their money go further by using different kinds of

tools? And those tools could be an M-Pesa account, it could be a Western Union account, it

could be a bank. But it also can be a nice network of neighbors or a local savings club, or

money under the mattress. Whatever works for them is what we should be looking at.

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FLW 1 REFLECTIONS ON SYSTEM D JAMILAH WELCH & K WILSON

J WELCH: [0:07:44] Thank you Kim, this has been a really eye opening and mind bending

short conversation and I think it’s given me a lot to think about as far as what financial inclusion

means and digital money means in the context of financial inclusion. So thank you.

K WILSON: [0:08:03] Well thank you, I’ve really enjoyed our conversation.

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