fragmentation when a crisis strikes – and in some ways, even more so than before. 2 / 3 bis central bankers'speeches fiscal consolidation therefore needs to go hand in hand with efforts strengthening our area - wide defences. of course, the esm is already an important safeguard. but we need to enhance its competences in the field of crisis management and make it more agile. this includes making full use of its existing instruments, such as the direct bank recapitalisation tool and precautionary financial assistance, and moving away from the unanimity requirement. and in the long run, it means bringing the esm into the community framework. the stability of the euro area cannot be in the hands of one, or a few, member states and their parliaments. ultimately, the esm needs to be accountable to the people of europe. but union stabilisation cannot stop with the esm. the euro area needs a fiscal instrument that can help it cope with large shocks without having to rely excessively on the ecb. such an instrument would be the third line of defence of our monetary union. it would support aggregate demand in countries experiencing a crisis, drawing on common funds. it would thereby provide an additional layer of stabilisation that safeguards trust in national policies. eu solidarity would then take on a whole new meaning. whether such an instrument would directly support national safety nets, or would instead undertake investment projects that create jobs and income, will be subject to much debate. whether it should be balanced by stronger market discipline will be even more heatedly debated. these discussions will take time. however important, they should not obscure what should be governments ’ urgent priority : strengthening the first two lines of defence of our monetary union. achieving lasting economic stability must involve finding a balance of discipline and flexibility in our economies. this will both strengthen support for the euro and help alleviate the pressure and burden on the ecb in crisis times. realpolitik will dictate the speed of reforms. what we do need is broad agreement that they will be built on these three lines of defence, and visible progress on the first two. thank you. 3 / 3 bis central bankers'speeches

of transaction speed and scalability. these concerns are most evident for permissionless dlts, such as bitcoin. some permissioned dlts are less energy - intensive but may still compare unfavourably to centralised infrastructures. importantly, the governance of major dlt technologies and networks is dominated by actors who are either unknown or based outside europe, which raises concerns about strategic autonomy. but despite the uncertainties surrounding dlt ’ s potential, we want to be prepared for a scenario where market players adopt dlt for wholesale payments and securities settlement. we must ensure that, in such a scenario, central bank money would still retain its role as the settlement asset for wholesale transactions. if, for example, market players start to use dlt for securities settlement but face difficulties using target services [ 10 ], they may turn to alternatives like commercial bank money or stablecoins. this would entail a number of risks, such as central bank money having a reduced role in settlement processes, as well as trading and liquidity becoming fragmented. the result would be payments and securities settlement becoming less safe and less efficient, which would undermine financial stability. the use of stablecoins would magnify these risks. as we have seen in recent months, stablecoins are prone to runs. in other words, they are stable in name only. and allowing them to be fully backed with central bank money would effectively outsource the provision of central bank money to private entities, endangering monetary sovereignty. a shift away from central bank settlement systems would also imply that authorities would lose direct access to settlement data. this could slow the speed of intervention in the event of settlement bottlenecks and impair the analysis of financial stability. the eurosystem is therefore exploring ways in which market participants who adopt dlt could interact with the target services to settle the euro cash leg of their transactions in central bank money. we are analysing two options. the first would entail creating a bridge between market dlt platforms and central bank infrastructures. [ 12 ] this would allow a securities transfer on a dlt platform to trigger settlement in central bank money. it is very likely that a solution that builds on the existing target services could be implemented more rapidly than a solution based entirely on dlt. another option would be to create a new dlt - based wholesale settlement service with dlt - based central bank money. [ 13 ] the eurosystem could, for instance, launch its own