As regards new technologies, algorithmic and high-frequency trading is becoming increasingly relevant in financial market transactions. Some evidence suggests that the proliferation of these trading technologies may increase the probability of flash crashes and intensify the procyclicality of financial markets. Therefore, it would be advisable to further analyse, and closely monitor, these activities. In terms of new instruments, we must, of course, talk about crypto-currencies. To date, they have played a relatively minor role in financial markets and have not posed a significant challenge for financial stability, not least because of their relatively limited adoption. A potentially much more relevant phenomenon is that of the so-called “stablecoin” arrangements, which are receiving growing attention by authorities across the globe given their potential implications for the payment system and financial stability. While precedents such as Tether show that there has been a genuine interest in developing less volatile tokens for quite a while, some of the latest initiatives have become an emerging source of concern for financial authorities. This is due to their recent drive towards global scale and the increased complexity of their respective ecosystems and the underlying stabilisation mechanisms. There is broad consensus that the heterogeneity surrounding the various design aspects of upcoming stablecoins augurs a myriad of new or amplified risks. Thus, current regulatory, supervisory and policy tools and practices need amending to secure their effectiveness. All these matters mark broadly unchartered territory for everybody.

The result is that, on average, between 40% and 60% of an idiosyncratic shock to a euro area country translates directly into a decline in its consumption, twice the analogous impact estimated for the United States. Against this background, the Capital Markets Union, which aims at providing firms and households with identical funding and saving opportunities, irrespective of their location, remains an essential initiative. The Capital Markets Union project has focused on several initiatives (or operational objectives). These aim to improve information flows in order to facilitate price discovery; to allow better access to new markets and products; and to achieve a stronger enforcement  13  of rules and procedures in order to increase legal certainty and investor protection. Progress has been fruitful in some areas, but much remains to be done. In general, the project garners broad support from all parties concerned, but it currently lacks much-needed momentum. As indicated in the conclusions of the Report by the Next CMU High Level Group in October last year, the sheer breadth of the project and the multiple dimensions involved require the identification of a large number of specific actions, aiming to enhance supervisory and regulatory harmonisation, which must be promoted and implemented at the national and supranational level. Finally, the creation of a common safe asset for the euro area may be the cornerstone of a common capital market, with important implications for other policy areas 2. A wellfunctioning capital market requires a broad asset class with ample liquidity and low risk.