These economic characteristics include: the cultural and political preferences of citizens; economic fluctuations over the business cycle; and structural features of the economy, such as industrial composition and policy transmission.46  A related aspect is the degree of specialisation or comparative advantage in an economic area. The greater this degree of specialism or comparative advantage, the stronger the case for having it recognised and supported in the setting of economic policy. Specialisation is one of the ways in which an economic area can harvest the benefits of economies of scale and scope through the agglomeration multiplier.47  On the face of it, there is a considerable degree of heterogeneity across the UK, including in terms of income, wealth, health and happiness. Other things equal, this would support locally-targeted policy  interventions. At the same time, those differences are often as large locally as they are regionally. That suggests a very decentralised setting of policy would be needed, which may come with costs. (b)  Diversity and Risk-Sharing  One of the most important of those costs is the loss of risk-sharing. A diverse economic area allows aggregate fluctuations to be smoothed-out, in the same way a diverse portfolio of assets smooths out returns to an investor. And by smoothing-out aggregate fluctuations, diverse economic areas can help smooth out local fluctuations by transferring resources between regions to insure against region-specific shocks. Another set of factors weighing in the same direction are economies of scale and scope.

These clearly create opportunities to improve payment services in at least three ways, by:  2/5  BIS central bankers' speeches  Harnessing the underlying blockchain technology to improve or supplement existing processes: the Banque de France is already employing blockchain technology to improve industry processes. For example, we are using a blockchain project called MADRE to assign SEPA Creditor Identifiers, which are needed for creditors to issue direct debits. Helping to remedy market inefficiencies: this could be done in the area of international multi-currency payments, for example, with a view to improving the conditions under which individuals transfer funds abroad. Diversifying project financing methods: a prime example would be ICOs, which have enabled swift and large-scale fundraising in the network technologies sector in the past two years. 3. Yet for all that, can crypto-assets become true currencies that will revolutionise our payment system, providing the decisive innovation that will lead us to the cashless society that some people are predicting and even hoping for? For the time being, this seems unlikely because existing crypto-assets are far from perfect. As many central bankers have pointed out, today’s crypto-assets do not satisfactorily offer the qualities expected of a currency and cannot be considered as such: First, their value fluctuates enormously, preventing them from being used as units of account. As a result, very few prices are denominated in crypto-assets and not many large brick-and-mortar or online retailers accept bitcoin for example, although there are some exceptions [i.e.