Mathew McDermott is a managing director at Goldman Sachs, where, after nine years at Morgan Stanley, hes spent more than 17 years and now runs the firms digital assets division.

In November, Goldman launched Datonomy, which it described as a new framework for the classification of digital assets, and which McDermott says has generated a lot of interest. In a recent interview with Fortune from London, he explained how blockchain and the tech behind it will have massive effects not just for clients but for the firm itself, which oversees roughly $2.5 trillion in assets.

(This interview has been edited for length and clarity.)

When people ask, What do you do? and you say, Im at Goldman, well, what do you do at Goldman?

Well, globally, I head the digital asset business at Goldman Sachs. The way that I describe it is, we look to use the underlying technology to transform the way these kinds of assets are issued, traded, and then looked after post-tradewhat the components are, and the online technology we use in looking to re-architect the ways financial markets operate. So repo, securities, finance, collateralizing, derivatives, intraday repoits really kind of just identifying commercial opportunities using the underlying technologies.

You were at Goldman about 12 years before you started running the digital assets side. What drew you to the opportunity?

To me, its the positive impact this technology could have on many of these markets, which have been relying on technology thats been around for many years, in a really profound way, not only for Goldman, but for the market more broadly. So when I was asked to take over the business and given the ability to create a strategy for digital assets, it was unbelievably exciting. Naturally, I saw a significant opportunity, and beyond that it got me even more interested in the space after separately following these markets more broadly from a personal perspective. So, yeah, it was just a very interesting time.

Your CEO loves saying Goldmans not a bank, were a technology firm. So in a lot of ways, gaining this sort of foothold is just the next logical step, right?

As you look at certain markets, I think having the ability to try and redefine the way that they operate, that can actually create revenue opportunities and can actually make things more efficient, reduce risksyou know, thats pretty compelling.

The situation in the U.S. is bad from a regulatory point of view. Theres the MiCA regime in Europe, and Dubai and Singapore and Hong Kong are coming along. Is crypto really going to be viable if it doesnt have a home at all in the U.S.?

Far be it for me to say. If nothing else, crypto has proved itself to be exceedingly resilient, given what its faced in terms of challenges over its entire life, which is still relatively short. But I think of the use of the underlying technology, which is primarily where I spend my dayI cant trade cryptocurrencies as we dont hold tokens on our balance sheetand Ive been super excited by the breadth of the financial market thats really gravitated to this space. The sell side, the buy side. 

If you think of all kinds of major asset managers, pretty much everyone has a digital asset strategy. I think the U.S. is obviously taking a slightly different approach at the moment, but I kind of remain optimistic that they will pivot at some point.

Its been about six months since launching Datonomy. How has that worked out? Can you share some highlights?

For those less familiar, thats a digital asset taxonomy that we have developed in conjunction with MSCI and Coin Metrics, and its done everything weve expected it toweve had a lot of interest. Now, were actually working with a variety of different clients in terms of thinking through potential indices, licenses for people to actually use the data. 

One of the key drivers for us in creating this was to give people the granularity to understand different tokens and, you know, look for the top 150 to 200, at any given time, to enable them as they think through the investment to really delve into that they want to invest inwhat kind of smart contracts, which tokens they should be looking at, or should they be looking at a stablecoin.

When it comes to maximizing these efficiencies, how much is for clients but also how much is for Goldman? How is using blockchain and similar tech helping do your jobs even better?

I think its a really good question. Weve spent a lot of time recently talking, in closed sessions with regulators and central bankers and the like, but I think commercially that sometimes it gets a little lost on people. But there are two real core areas: first, the tokenization and digitizing the lifecycle of different asset classes. Its about creating efficiencies from inceptionfrom issuance through post-tradeand we see a huge value opportunity there when it manifests itself at scale.

The second area, which kind of answers your question, is collateral mobility. A lot of the systems we use are probably as old as me, and there are inefficiencies in those. In the movement of collateral from one custodian to another, you cant be as precise as one would like, in terms of liquidity, which creates inefficiencies. There are certain risk profiles and trades you can totally transform through the use of DLT because of that precision, that settlement finality.

The story of crypto, for many, is more of a lone-wolf vieweverythings decentralizedbut Im seeing more and more TradFi firms figuring out ways to implement this techand more quickly. Is that a fair generalization? Or is it still a little early to say the big guys are going to win again?

Ideologically, the institutions that looked at this technology are using it for different purposes. As you think about what options you have, in terms of using the underlying technology, you have private permission, which ostensibly is a glorified database, you have public permission, and then you have permissionless.

There are thoseeven journalists, kind of naturallyprobably very focused on just opening up and creating a more democratized kind of marketplace. But I think weve seen whats happened when theres no regulationspeople do conduct themselves in a way that just isnt appropriate for a multitrillion-dollar marketplace. I firmly believe its intuitive. If youve laid the foundations and showcase how this technology can be hugely positive to everyone because it can bring down costs, you can be more efficient with key resources, and you can actually create a decentralized marketplace.

For what its worth, U.S. banks are typically focussed on the private blockchains at the moment. In client discussions, that tends to be where they want to play because of the control, privacy, security, KYC, all the things youd expect.

I think as people get more familiar with the technology, theyll see the value that it adds. Web3 is all about empowering the individual, and I genuinely believe one of the biggest beneficiaries of this technology is going to be wealth management clients and family offices, because theyre going to get greater access to investment opportunities. There will just be more liquidity in the market because youre going to start seeing different marketplaces emerge.

As public blockchains improvetheres probably a nicer way to put it, as they matureand people get more comfortable with them, opportunities will present themselves. I do think its, probably, a few years away, but I think thats the way it really has to evolve, for regulators and institutions to be completely comfortable with it.

When you say a few years down the road, do you mean two or five or 10? And is there a milestone, a key point before the next key point?

I dont think theres going to be a definitive line in the sand that we hit and suddenly everyone will open up. But DeFi marketplaces continue to evolve. Theres some impressive technology in some of these liquidity protocolsand much beyond that. That could add an interesting dimension to the marketplace. It can, commercially, showcase that this technology is transformative. People evolve and can create the kind of robustness that makes regulators comfortable. But is that two years away? No. Is it five years away? Possibly.

Are there too many blockchains out there? Would the industry be better off just focussing more on Ethereum and Bitcoin, and one or two others, rather than everyone starting their own project and issuing tokens?

I dont have a strong view either way. Ethereum and Bitcoin have proven themselves to be remarkably resilient. There are some very interesting others that have unique features, but I think, over time, they will probably consolidatebut its difficult to say which ones those will be. Theyll probably coalesce around a number of them where there will be clear interoperability between them all. I dont think there are going to be tens and tens of themit will probably be a small cohort.

What does this mean for the future of finance?

I would say huge swaths of the financial market transactions will be on blockchainId say that just keep my job. [Laughs] But I genuinely believe the blockchain technology will have a profound impactmaybe not necessarily on every single kind of marketplace, but on huge swaths because of its hugely positive features, the efficiencies, the revenue opportunities.

I look over just the last three years that Ive been involved in this market: Weve gone from a place where there were no regulationspeople werent even interested in talking about itto actually getting proper regulations, actually getting real clarity. If we see the same speed of change as the last three years, in three years, I think itll be a profoundly different financial system.

Both countries would benefit from dialogues on several significant and often highly divisive issues in coming months, building toward a possible meeting between U.S. President Joe Biden and Chinese President Xi Jinping at the APEC Summit to be held in San Francisco in mid-November.

Used wisely, this series of talks will enable both nations better to understand one anothers basic goals, articulate what they see as major differences and vital interests, and find ways to build mutual respect and trust.

Such talks are particularly important now, following significant personnel changes among high-level officials in Beijing. These new Chinese officials and their American counterparts need opportunities to get to know one another and develop rapport. The talks also come at a time when control of the U.S. House of Representatives has changed hands. China could be informed by U.S. officials about the new leadership in Congress and what they might mean for future China-US relations and negotiations.

Not all the goals mentioned above can be accomplished quickly. Many monthsor even yearsmight be required to make major progress in some areas. In some cases, we may have to simply agree to disagree and find a constructive framework for managing our differences. 

It is useful to recognize that the kind of relationship we had for several decades in the past is unlikely in the future. Relations are likely to be considerably more fraught and, on various matters, more politically confrontational. On the flip side, the recognition of a new set of realities and opportunities could lay the basis for a sound, constructive, and realistic relationship going forward.

The first reckoning is that we cannot organize our bilateral relations or manage the new global order based on sustained tensions between our two countriesor by seeing this as a zero-sum contest. Nor can we do it by engaging in rhetorical challenges to, or criticism of, the legitimacy of the system of governance of one country by the other. There are profound differences in historic cultures and political systems that must be recognized and respected.

For future relations to be productive, there needs to be mutual respect for each countrys culture and system. And we must seek reasonable objectives. For example, for Washington, attempting to slow or impede Chinas economic growth and development is not a realisticor constructiveoption. China has the technical capabilities and human skills to maintain significant growth for a long time to come. And the impressive technological progress China has made should encourage the U.S. to focus more of its energies on its own internal improvements at homebuilding out its own 21st-century technical capabilities and strengthening education at all levels in the fields of science, math, technology, and engineering. 

Attempting to curb or deter the growth of Chinas economic relations with other nations is equally unrealistic and unconstructive. Most countries, including U.S. allies, seek constructive trade and investment relations with China. For many, China is, and will remain, their largest trading partner. 

To address key issues more deeply, an enhanced and more regular high-level dialogue on several issues is critical. I had the privilege of being on the National Security Council staff of Henry Kissinger in the early 1970s, when the dialogue between China and the U.S. was just beginning. Early talks were more about the broad objectives of each country than details. This led to a series of understandings on mutual objectives over the next several years. Our leaders did not set out to resolve all issues from the start. The big areas of agreement set the stage for future steps toward greater normalization in the period that followed. 

I was, therefore, encouraged that recently President Joe Bidens national security advisor, Jake Sullivan, met with Chinese Communist Party Politburo Member and Director of the Office of the Foreign Affairs Commission Wang Li, to address a wide range of bilateral and international issues. Most importantly, the two sides agreed to maintain this important strategic channel of communication. This is a healthy step. 

The U.S. Secretary of State and Chinas top foreign policy official should also undertake a series of regular meetings to better understand one anothers regional and geopolitical objectives and manage their differences. Similarly, meetings between the U.S. Treasury Secretary and Chinas finance minister can lead to understanding and cooperation on bilateral and global issues, as it did in the 2008 financial crisis when their cooperation was excellent and vital to a solution. 

The two countries also must effectively address trade and investment relations, which have been sources of tensions between us for several years. Commerce Minister Wang Wentao will soon be meeting with Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai.

These meetings are not likely to produce any quick solutionsbut they are a step in the right direction. A major challenge is that a growing number of trade and investment issues are inextricably linked to security issues. Both sides want to protect their advanced technologies, especially those that could have military uses, and avoid vulnerability to possible strategic or political leverage by the other. 

Additionally, the two countries would do well to agree on a communication channel and regularly scheduled meetings between top military leaders on both sides in order to understand each nations strategic objectives and avert conflict and miscalculations.

In a wide range of non-strategic areas, both economies can gain enormously from mutual and fair trade and investment. This can only happen if domestic policies, sanctions, and rules in each country are not applied in a way that is discriminatory to the other. Mutual understandings are necessary to accomplish this. And because numerous other countries have an interest in the evolving global economic order, China and the U.S. have an interest in broadening their participation in many aspects of these discussions.

There are many other areas, including climate change and cooperation on medical research and disease prevention, where sustained talks among scientists and researchers can produce enormous benefits. Considerable progress has already been in these areas to the benefit of both countries.

Finally, summits between heads of state are vitally important. Novembers APEC (Asia-Pacific Economic Cooperation) Summit in San Francisco is an optimal opportunity for the next meeting between our presidents. We should welcome President Xi to the U.S. for this important meeting of Pacific Leaders and an opportunity to defuse tensions. 

Government officials work best when facing deadlines, and now would be a good one to mobilize key agencies and personnel on both sides of the Pacific to prepare a constructive agenda and constructive outcomes. 

The goal would not be to cover every issue or every detail. It would be to discuss the broad goals of each country, identify a few key initiatives with potential for progress and agree on ways of building a mutually beneficial and stable relationship in the future.  It can be a big step toward a more constructive relationship for both nations and the world.

Robert Hormats is a former Under Secretary of State for Economic, Growth, Energy, and the Environment, and the author of The Price of Liberty: Paying for Americas Wars.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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Unlike Morgan Stanleys almost apocalyptic tone, with analysts forecasting a peak-to-trough CRE price decline of as much as 40%, worse than in the Great Financial Crisis, Bank of America seems to suggest that commercial real estate will hold steady, while echoing the office sectors diminishing value, in a research note published last week.  

According to Bank of America analysts, the U.S. commercial real estate market faces two key challenges in our post-pandemic world. The first? High inflation thats forced the Federal Reserve to raise interest rates in an attempt to rein it in. Thats made it much more costly to service new and maturing commercial real estate mortgage debt. The second challenge, which has already directly affected the office sector, is remote work.

Still, Bank of America (BofA) analysts argue that those challenges are manageable for 3 key reasons, distancing themselves from the next shoe to drop narrative. 

We examine these challenges in the context of improvements to the commercial mortgage underwriting process in the post-Great Financial Crisis (GFC) era, Bank of America analysts wrote. We conclude that the challenges are real and significant, but, for several reasons, they are manageable and do not represent a systemic risk to the U.S. economy.

Lets take a look at the 3 key reasons behind BofAs manageable CRE outlook.  

1. There are multiple financing tactics for CRE borrowers to avoid defaulting on their debt

Bank of America analysts say 17% of CRE debt will mature this year, but they expect loan modifications and extensions to become commonly used tactics. That could mean that borrowers who employ such tactics may avoid some of the higher cost fueled by the economys high interest rates or the potential of defaulting on their debt, directly addressing the first challenge presented by Bank of America analysts.  

Additionally, along with loan modification, property repurposing has become a standard practice in the market, according to analysts. That can serve as another option in the case that a borrowers debt is set to mature at a higher rate.

2. Office propertiesthe sector most at riskare only a small percentage of all CRE loans 

Work from home (WFH) and the broader phenomenon of de-urbanization have diminished the need for and intrinsic value of at least one sector of the CRE market, the office sector, Bank of America analysts wrote. 

There is no question that the office sector is facing significant headwinds fueled by the work-from-home era thats lasted in the post-COVID world. However, the office sectors rising vacancy rates and falling property values is not indicative of the overall health of the commercial real estate market.

Bank of America analysts claim that office properties account for around 23% of CRE loans maturing this year, but thats only 3.8% of all commercial real estate, which is a comparatively modest figure, in their view. 

3. Improvements to underwriting post-GFC mean these loans are less risky

There are two critical parameters within CRE mortgage underwriting, along with trends that have emerged following the Great Financial Crisis (GFC) that can offset the risk ahead, according to Bank of America analysts. Of the two critical parameters, the first is the debt to service coverage ratio (DSCR), which measures the borrowers ability to pay. The second is the loan to value ratio (LTV), which measures two things: the loan recovery potential if a borrower defaults on their debt and the borrowers ability to refinance following maturity. 

In the post-GFC era, analysts claim theyve observed two trendsdebt to service coverage ratios are materially higher and loan to value ratios are materially lower. Both trends signal a shift from the lax underwriting in the pre-GFC era, according to analysts.

The decline in LTV from 70% in 2007 to a low of 52% is significant; substantially more equity is required upfront nowadays, which means loans are far less risky, Bank of America analysts wrote.

Along with improvements in underwriting, the sectors price growth over the years has led to increased equity which can also serve as a buffer to risk, risk diversification across lender types, and a significant increase in bank capital post-GFC, has led to Bank of Americas assessment that the challenges ahead for commercial real estate are manageable.

We think CRE contagion risk for the broader economy will be both minimal and manageable, analysts wrote. We think credit tightening will occur, but that is a necessary part of business cycles and will help reduce excess CRE capacity.

Though its still too soon to know exactly what the 2024 adjustment will beit is based on inflation numbers from July, August, and September of the preceding year and announced in Octobercurrent projections put it around 3.1%. But it could be even less generous than that, says Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League.

Since there are still five more months of data to come in, my estimate will change, Johnson tells Fortune. The long-term inflation is still downward. Thus, the COLA could go lower than 3.1%.

The COLA affects some 70 million people who receive Social Security benefits, including seniors, disabled adults, survivors of insured workers and low-income individuals who receive Supplemental Security Income (SSI).

Due to rapidly rising inflation over the past few years, those 70 million beneficiaries received larger than normal adjustments in 2022, when the increase was 5.9%, and in 2023, with the four-decade-high of 8.7%. Even if the adjustment hit 3.1% next year, that would still be higher than many years over the past decade (in 2021, the COLA was 1.3%; in 2020, it was 1.6%).

Inflation and a rocky stock market have hit seniorsincluding both baby boomers and members of the Silent Generationespecially hard over the past few years. Some have had to make hard choices on what to pay for as their budgets are stretched thin; others have delayed retirement or gone back to work to make ends meet.

But even though inflation may be moderating, its still higher than it has been in 20 years. And the Senior Citizens League (SCL) points out that many people on fixed incomes, and especially seniors, have actually lost buying power over the past two decades. The longer someone has received benefits, the more their purchasing power has fallen, as the losses compound each year. The organization also found that those who retired before 2000 have lost 36% of their buying power.

Per the organization, Social Security benefits have increased by 78% between January 2000 and February 2023, while the cost of goods and services retirees typically buyincluding food, utilities, car maintenance, etc.have increased by 141.4%.

For every $100 a retired household spent on groceries in 2000, that household can only buy about $64 worth today, according to the SCL.