Finally, we turn to the layer at the base of the system – the Instruments, or forms of money that should confer the properties of a public good. 2/4  BIS central bankers' speeches  The decentralisation of instruments is most clearly associated with the emergence of alternative currencies to those issued by central banks. Technology firms with large ecosystems, or technology itself can create new non-fiat currencies. While today’s crypto instruments (e.g. Bitcoin) have failed to become money, we should not discount the possibility of better algorithms leading to viable cryptocurrencies as a global medium of exchange in the future. But the widespread use of private cryptocurrencies could lead to an erosion of the nation state’s monetary sovereignty. This will in turn have implications for central banks’ ability to safeguard financial stability. As Mark points out, the continued centrality of public money in the financial system is key to safeguarding the soundness and stability of all money in the economy. A pre-condition for this is that state-issued currency remains the domestic economy’s predominant unit of account. The currencies of small, open economies may be particularly vulnerable to loss of monetary sovereignty. They do not have the global network effects that currencies of larger nations enjoy. Markus Brunnermeier and others have highlighted the possibility of “digital currency areas” that transcend national borders with even larger and more powerful network effects. Currency competition is not a challenge that we are unfamiliar with.

Efforts to strengthen the financial and banking systems need to be made in the next years, also for the fulfilment of the so-called "economic" Copenhagen criterion, which requires the existence of functioning market economies and the ability to cope with competitive pressures. Compliance with this criterion for EU accession will require the adoption of EU legislation in the area of financial services, including those related to banking, insurance and investment firms, as I have mentioned before. All in all, in order to fully comply with the acquis communautaire, it would be necessary to further advance institutional reforms related to the applicability and enforcement of laws, in particular as regards the enhancement of corporate governance and legal frameworks. Finally the development of a stable and well-functioning financial sector in the accession countries is also key to the smooth conduct of monetary policy in an enlarged euro area. Efficient and competitive banking sectors as well as smooth functioning capital markets are needed to ensure macroeconomic and financial stability in the accession countries and to support the convergence process of these economies. They are also needed for the proper conduct of monetary policy and, thus, for the successful participation of accession countries in the euro area. Indeed, deep and liquid capital markets are key to enabling an efficient use to be made of monetary policy instruments, since structural weaknesses in the banking sector could have severe implications for the monetary policy transmission mechanism and could affect the responsiveness of banks to changes in the monetary policy stance.