Jack Ma's speech at the Bund Financial Summit in Shanghai 2020

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Dear Chairman Chen Yuan, fellow leaders and friends from the financial sector, good morning. Thank you for your invitation. I am very glad to have this opportunity to learn, communicate and discuss with you.

In 2013, also in Shanghai, I went to the Financial Summit in Lujiazui, Shanghai to express my whimsous views on Internet finance. Seven years have passed, and today, as an unofficial non-professional in finance, I am very pleased to come to this unofficial forum to share my views.

To be honest, I am also very confused about whether I want to speak today. But I think there is one thing we have no obligation to do, that is, to think about the future, because although the world has left us many opportunities for development, there are only one or two critical opportunities, and now is the most critical moment. So I think I'd like to share with you some of my own ideas, which are the result of our 16 years of practical experience, as well as discussions and exchanges with scholars, experts and practitioners around the world during my tenure as co-chair of the

UN High-level Panel on Digital Cooperation and advocate for the UN Sustainable Development Goals. I think I have retired anyway, so I would like to share with you in an unofficial forum the professional opinion of a layman and non-professional for your reference. It may be immature, wrong and ridiculous. Please take a look: First, we have always had some inertia in our thinking. For example, we always felt that in order to keep up with international standards, we must fill the so-called gaps that developed countries in Europe and the United States have, but we do not have. We regard filling the gap at home as our goal.

I have always felt that in today's situation, the phrase "filling the gap" is problematic, not because what is in Europe and the United States is advanced, or what we have to fill. In fact, today we should not deliberately or blindly want to be in line with which thing, adapt to which country's standards, fill which gap, today we should think about how to be in line with the future, how to adapt to the future standards, how to fill the gap in the future, we should understand what

the future is like, and what we want to do, and then go to see what others do. If we always repeat other people's language and discuss the theme set by others, we will not only lose the present, but also miss the future.

After World War II, the world needed to restore economic prosperity. The Bretton Woods System was established, which gave a huge boost to the global economy.

Later, when

the

Asian financial crisis

occurred, the risk control mentioned in the Basel Accord attracted more and more attention and later became an operational standard for risk control. The current trend is more and more that the world only focuses on risk control, not on development, and rarely thinks about the opportunities for young people and developing countries. This is actually the root cause of many problems in the world today. We can also see today that the Basel Accord itself has greatly limited the overall innovation in Europe, such as financial digitalization.

The Basel Accord is more like a senior citizens' club, dealing with the aging of a financial system that has

been running for decades, the complexity of the system.

But China's problem is just the opposite. China's financial system is not a systemic risk. There is basically no risk in China's financial system.

Like other developing countries that have just grown up, China's financial industry is still young, and it does not have a mature ecosystem. It does not have a complete flow. Big banks are more like rivers and arteries of blood. We will die when there is a flood and die when there is a drought. Therefore, today our country is at risk of lacking a healthy financial system.

What we need to build is a healthy financial system.

Like Alzheimer's disease and polio, the symptoms look very similar, these are two completely different diseases, if children take the drug for Alzheimer's disease, not only will they get the old man's disease, but also many inexplicable diseases. The Basel Accord is to treat the diseases of the elderly with an aging and overly complex system. What we have to think about is what we have to learn from the elderly? The concern of the elderly and the young is different. The old care

about whether there is a hospital, while the young care about whether there is a school district. It is a completely different system of thinking.

Today, I'm proud to announce that last night we set the pricing for Ant's IPO. This is the first time a major tech company has priced outside of New York City. This was unthinkable three years ago, but it happened today. It's amazing how the world has changed.

Second, innovation must pay a price, and our generation must take responsibility.

Many problems in the world today, including China's, can only be solved through innovation. But for true innovation, there must be no one to lead the way, and there must be someone to take responsibility, because innovation is bound to make mistakes. The question is not how not to make mistakes, but whether we can improve and correct them after making mistakes and persist in innovation. To do innovation without risk is to stifle innovation. There is no innovation without risk in the world. In many cases, the biggest risk is to control the risk to zero.

I proposed Internet finance seven or eight years ago, but we have always emphasized that Internet finance must have three core elements: first, rich data; Second, risk control technology based on big data; The third is based on big data credit system. When measured by these three standards, we will see that P2P is not Internet finance at all. But today, the innovation of the whole Internet technology to finance cannot be denied because of P2P. In fact, we should think about it: how can China have thousands of Internet finance companies in a few years? What is the cause of thousands of P2P? Today our regulation is really difficult. Innovation comes from the market, from the grassroots, from young people, and the challenge to regulation is increasing. In fact, supervision and supervision are two things. Supervision is to watch your development and pay attention to your development. Supervision is only when there is a problem.

Supervision is not the same as management, and policies and documents are not the same. Today, there are too many documents that do not allow this and

that,

and

policies

are

mechanism

building

to

encourage development. Today, we need "policy experts", not "document experts". Policy making is a technical work, in fact, to solve the problem of system complexity, I can provide Taobao's experience as a reference.

17 years ago, we made a lot of policies that were not allowed. At that time, Taobao's policies were very complex and merchants could not understand them.

Later, we proposed that if you want to add one policy, you should subtract the first three. We now have more and more documents, so that anyone who does anything may have something wrong.

Theory and system are not the same, experts and scholars are not the same, experts are out of work, work very hard, but not necessarily will summarize, many scholars are not specific work, but can form a theory from the practice of others. Only when experts and scholars are combined, and only when theory and practice are combined, can we truly innovate and solve the problems of today and tomorrow. We need theory from practice, not from the practice of office theory,

P2P is a lot, is from the practice of office theory, the correct understanding of P2P gives us a huge lesson, not to deny the Internet technology, let alone repeat the practice of office theory.

I think there is a phenomenon

that many

regulatory authorities around the world have no risk to themselves, no risk to their own departments, but there is a risk to the whole economy, the risk of the whole economy not developing. The competition in the future will be one of innovation, not just of regulatory skills.

Third, the essence of finance is credit management.

We must get rid of the pawnshop mentality of finance and rely on the credit system.

Today's banks still carry on the pawnshop ideology, and mortgage and guarantee are pawnshops. This was also a

powerful

idea

100

years

ago.

Without

mortgages and guarantees for these innovations, today's financial institutions would not have been possible, and China's economy would not have developed to what it is today over the past 40 years.

However, the system of relying on assets and

mortgages will go to extremes. In recent years, I have communicated with many entrepreneurs that China's financial pawnshop mentality is the most serious, or all the assets are mortgaged out, the pressure is huge, and the action is deformed after the pressure is great; Or they make unscrupulous loans and constantly increase leverage, resulting in huge debts. We all know: you borrow 100,000 yuan from the bank, you are a little panic; If you borrow 10 million yuan, you and the bank are a little scared. If you borrow $1 billion, you don't have to panic at all, the bank will panic. There is also a habit that banks like to give loans to good enterprises, enterprises that do not need money. As a result, many good enterprises become bad enterprises, forming a diversified investment. Too much money also causes a lot of problems.

The pawnshop idea of mortgage is unlikely to support the financial needs of world development in the next 30 years. We must use today's technological capabilities to replace the pawnshop idea with a credit system based on big data. This credit system is not based on IT, it is not based on the acquaintance society,

it must be based on big data, in order to truly make credit equal to wealth. In fact, those who beg for food must also have credit. Without credit, they will not even be able to eat.

Today's world is looking forward to a new financial system that really thinks for the future.

Today's financial system is a product of the industrial age. It is a comprehensive financial system set up to solve the problem of industrialization. It is the "28 theory". To invest 20% to solve 80% of the problems. The financial system of the future is to solve the "82 theory", to help 80% of small businesses and young people, to drive 20% of the people. In the past, "people looking for money" and "enterprises looking for money" should be transformed into "money looking for people", "money looking for enterprises" and "money looking for good enterprises". The only criterion to evaluate this system is whether it is inclusive, inclusive, green and sustainable. The cuttingedge technologies behind it, such as big data, cloud computing

and

blockchain,

can

shoulder

great

responsibilities today.

Ladies and gentlemen, if after World War II, people at that time had the vision to design a good financial system for future generations, for the future, we have the responsibility and thinking today to build a financial system that truly belongs to the future, to the young people and the next generation, and to this era.

Today, it is not that we cannot do it, but that we do not do it. Today, our technology has made it possible for us to do this. Unfortunately, many people are not willing to do it. Today's global financial system must be reformed, otherwise it will not only be a problem of lost opportunities, but also more chaos around the world. Because it is normal for innovation to be ahead of regulation, but when innovation is far ahead of regulation, when the richness and depth of innovation is far beyond the imagination of regulation, it is not normal, and society and the world will be in chaos.

Take digital currency as an example. If we build the financial system that the world will need 30 years from now with a vision of the future, digital currency may be very important at the core. It is true that today's

finance does not need digital currency, but tomorrow needs it, and the future needs it, and thousands of developing countries and young people need it. We should ask ourselves, what practical problems in the future is digital currency going to solve? The digital currency ten years from now and today's digital currency may not be the same thing at all. This digital currency should not be found from the history, should not be found from the perspective of regulation, should not be found from research institutions, but from the market, from the demand to find, never come to find. This is a matter of great importance. Our research institutions should not be policy institutions, and policy institutions should not rely only on their own research institutions. Because the digital currency system is a technical problem, but not only a technical problem, but also a solution to the future problem, digital currency may redefine money, although the main function of money is still there, but will certainly redefine money, just as the iPhone redefined the mobile phone, making phone calls is just a function.

Digital currency is far from the time to grab the

standard, is to create value, is the need to think about how to establish a new financial system through digital currency, think about the future for the whole world, think about how to do global trade, but also to think about the world should be able to use the tested technology based on the establishment of digital currency. To truly solve the problem of sustainable, green and universal benefits of world trade.

Finally, I would like to say that today, the human society has reached the most critical moment. We must not underestimate the epidemic. This epidemic is a force forcing progress of human society, no less than the Second World War. In terms of finance itself, the US has been pouring a lot of cash into the world, especially the US into the Wall Street stock market, and other countries are following its lead. What will happen next? The impact of this is far greater than the technical issues that many of us are talking about today. For many organizations in the world today, we are not simply opposed to it, but to rethink its value today.

Whether it is the United Nations, the WTO or the WHO, these

organizations

do

have

many

problems.

Eliminating these organizations will not solve the problems, but how these organizations should face the future and how to reform, it is necessary to rethink.

The new financial system is the direction of the future. Whether we are happy or not, it will rise.

Whether we do it or not, someone will do it. In the future, I believe that reform will be a sacrifice and a price will be paid. If our current generation has to make such reform, perhaps the next generation will see that we may be the one who carries a heavy load forward.

This

is

a

historical

opportunity

and

historical

responsibility. Over the past 16 years, Ant Financial has been focusing on green, sustainable and inclusive development. If green, sustainable, inclusive and inclusive finance is wrong, we will make a mistake again and again. Thank you!