A major one is to jeopardize the central role, as anchor and stabilizer, of the national central bank currency of a country’s financial and monetary system. This risk stems from the possible development of alternative systems whose settlement asset is not solidly linked to the national central bank money. For instance, tokenized financial assets are booming with the risk that transactions involving them settle with other settlement assets than central bank money, including crypto-assets. In the retail payment space, new players such as BigTechs with huge financial resources and benefitting from worldwide network effects, are making inroads into the payments industry and may provide dominant payment solutions with settlement coins with loose links, if any to central bank money. 2. Let me now turn to the consequences from a more macroeconomic perspective that are relevant for the conduct of monetary policy Digitalization affects the measurement of the price index. It exacerbates measurement issues well-known to price indices, such as dealing with frequent product replacements and 1/4  BIS central bankers' speeches  adjusting for product quality, or dealing with changes in the structure of the economy and hence the weight of new technologies in the economy. Digitalization also influences inflation dynamics via firms’ pricing behavior, market power and concentration, as well as firms’ productivity and marginal costs. On the one hand, it reduces search costs and increases price transparency –think of how e-commerce renders price comparison easy- thereby reducing mark-ups.

On the other hand, it increases the degree of market power and mark-ups by increasing entry costs for competitors of “superstar” firms especially due to a strong network and platform effect. The overall impact is therefore ambiguous. Hence, digitalization should not only influence price level, but also its dynamics and its relation to real activities. B. Policy responses and the role of a CBDC The macro financial and macroeconomic possible positive and negative impacts of the spread of digital technologies create challenges to central banks’ roles and missions. Three of them are of particular relevance in the case of Europe: i) a risk to European sovereignty in payments with the emergence of digital solutions offered by non-European-players, being private or public; ii) a threat to monetary and financial stability, notably through the risk of a disanchoring of the role of central bank money both in the retail and wholesale space; and iii) a threat to monetary sovereignty with the rise of significant new private actors and settlement assets. Three policy responses are currently under consideration to address them. 1. Drawing up an adequate regulatory framework The first response is regulatory. The regulatory framework and the supervision methods have to evolve, to address in particular the threat to financial stability and monetary sovereignty that digitalisation of finance and the real economy may create. In this matter, the enforcement of national regulations will not be enough. One of the main challenge is indeed to make sure that all countries adopt strict enough regulations, especially regarding crypto-assets.