##s. thus, in today ’ s environment, it is important to be vigilant to the signs that asset valuations appear to be elevated, especially in areas such as commercial real estate and corporate bonds, as well as the exceptionally low levels of expected volatility. nonetheless, there are few signs of a dangerous buildup of leverage or of maturity transformation, which have traditionally been important contributors to financial instability. this is due, in no small measure, to the improvements in capital, liquidity, and risk management made by the financial institutions at the core of the system, which are associated with post - crisis financial reforms, as well as money market reform and the greater transparency in the derivatives markets. to conclude, much depends on the evolution of inflation. if, as many forecasters assume, the current shortfall of inflation from our 2 percent objective indeed proves transitory, further gradual increases in the federal funds rate would be warranted, perhaps along the lines of the median projection from the most recent sep. but, as i noted earlier, i am concerned that the recent low readings for inflation may be driven by depressed underlying inflation, which would imply a more persistent shortfall in inflation from our objective. in that case, it would be prudent to raise the federal funds rate more gradually. we should have substantially more data in hand in the coming months that will help us make that assessment. references blanchard, olivier ( 2016 ). “ the u. s. phillips curve : back to the 60s? ” policy brief pb16 1. washington : peterson institute for international economics, january, piie. com / publications / pb / pb16 – 1. pdf. bonis, brian, jane ihrig, and min wei ( 2017 ). “ the effect of the federal reserve ’ s securities holdings on longer - term interest rates, ” feds notes. washington : board of governors of the federal reserve system, april 20. brainard, lael ( 2015 ). “ normalizing monetary policy when the neutral interest rate is low, ” speech delivered at the stanford institute for economic policy research, stanford, california, dec. 1. — — — — ( 2016 ). “ the “ new normal ” and what it means for monetary policy, ” speech delivered 5 / 7 bis central bankers'speeches at the chicago council on foreign affairs, chicago, ill., september 12. — — — — ( 2017 ). “ cross - border spillovers of balance

the european union. 7. the fact that euro banknotes and coins enjoy the status of legal tender means that they are a valid means of payment to settle a monetary debt unless the parties have agreed on another means of payment. the definition of legal tender relies on three main criteria : ( i ) mandatory acceptance ; ( ii ) acceptance at full face value ; and ( iii ) power to discharge from payment obligations. 8. the european commission is also expected to publish a proposal on the scope of legal tender of euro banknotes and coins in the second quarter of 2023. while the main objective of legislative measures related to cash is to preserve its widespread use and availability, for the digital euro the goal would be to establish its use and availability from scratch. 9. giving the digital euro legal tender status may help to increase its adoption and use, creating a positive feedback loop of network effects ( where the value and utility of a payment system increase as more users join and transact within the network ). in other words, the more people use a particular payment system, the more valuable and convenient it becomes for all users. 10. for the merchants, the digital euro, as a true pan european retail payment solution, would allow for enhanced bargaining power in the payments market that is currently dominated by a few dominant providers. 11. see written feedback after the 6th euro retail payments board ( erpb ) technical session, march 2023. 12. banks are mentioned here as an example of a payment service provider ( psp ) that could distribute the digital euro. the eurosystem believes that all psps as defined in the revised payment services directive ( psd2 ) – i. e. credit institutions, electronic money institutions and payment institutions – could distribute the digital euro. 13. panetta, f. ( 2022 ), “ building on our strengths : the role of the public and private sectors in the digital euro ecosystem ”, introductory statement at the committee on economic and monetary affairs of the european parliament, brussels, 29 september. 14. see written feedback after the 6th euro retail payments board ( erpb ) technical session, march 2023. 15. without this obligation, the digital euro may not be universally accessible to everyone across the euro area. there could be a situation where each euro area country has only a few banks ( or even no banks ) that offer digital euro accounts / wallets, forcing many customers to open an account with a new bank because their current one does not provide