bitcoin, this became clear to a wider audience when the huge electricity costs went public. also, there is no free lunch. there are trade - offs like the one that concerns convenience versus security. in germany, for example, various smartphone payment apps were hacked because the two - factor authentication principle was considered too inconvenient for fast - moving customers. so even if anything is possible in a digital world, there are still costs and trade - offs involved. digital natives have to learn to accept those limits and trade - offs. they need to learn not to be blinded by theoretical ideas and mere digital ideology. proof of work is what counts in the end. 5. why digital natives may themselves be prone to fallacies and there is a second observation about digital natives colonising the financial sector. they are prone to both misconceiving and underestimating the existing financial system. let me address the issue of misconceptions. lately, amidst the widespread media attention paid to bitcoin and other crypto currencies, there has been a great deal of confusion about what exactly crypto currencies are. as a central banker following the news, it ’ s easy for me to see that part of the puzzle is the fact that conventional money systems aren ’ t widely understood to begin with. but if people cannot elaborate on the difference between different kinds of currencies and other financial instruments, digital innovations can even become dangerous. this brings me to my most important point. however convenient and innovative digital evolution in the financial sector will be – financial institutions, as defined by the law, continue to play an eminent role for society. customers entrust banks with their savings, firms need financial services they can rely on, the economy at large requires credit. being part of the backbone of the 4 / 6 bis central bankers'speeches broader economy, banks need to ensure a reliable, trustworthy and sustainable flow of financial services. so banks are indeed still special in a way. and this is why they also still require special treatment in the digital age. for example, banks in germany can outsource it services and infrastructure, but they cannot shrug off their accountability towards customers in any way. so if a credit institution wants to move contents to an external cloud provider, it has to demonstrate that it is still able to manage all the risks involved in its services. thus, those who claim that the end of banks is near will face the following comeback : banks are still special,

##bank ’ s statutory mandate to promote the smooth functioning of payment transactions and payment systems. 1 / 4 bis central bankers'speeches the bundesbank is an integral component of the cash cycle in germany, but we are not the only game in town. the way in which the cash cycle functions internally is based on close cooperation and coordination between the central bank, commercial banks, cash - in - transit companies and retailers. all actors in the cash cycle need to work together to ensure that handling and distributing cash remains efficient in terms of costs. what does this mean? with the diversity of payment options increasing, their underlying cost structures are coming under greater scrutiny. measuring these reliably is not an easy task, but we have to try nevertheless. the bundesbank recently published a comparative study on the costs of using different payment methods in the german retail sector. 1 it turns out that, at least on a transaction basis, paying in cash is less costly than paying by debit or credit card. but with regulations bringing down the transaction costs of card payments and the rise of contactless payment options, this gap could narrow. at the same time, we are at risk of measuring underlying cost structures inaccurately if we fail to recognise that transaction costs may simply be becoming less obvious. customers reveal personal data when making card and contactless payments such that, in a way, costs are shifted towards them. it might be necessary for regulators to consider how to deal with this from a consumer protection point of view. at the end of the day, bringing down the costs associated with handling and distributing cash is a matter of maintaining efficiency. this requires sensible investment. all actors along the cash value chain are in it together to ensure that processes are automated and quick. credit institutions in germany, for example, are replacing traditional atms with devices that customers can use to both deposit and withdraw cash. these machines can even recycle banknotes. one in three of the roughly 60, 000 atms in germany have already been replaced with such upgraded devices. in the retail sector, more and more automated points of sale and back office systems are being deployed – for example, systems which can portion paid - in banknotes in store. mounting cash handling costs are likely to entice cash - in - transit companies to invest in more efficient and automated processes. finally, turning to us, central banks need to keep on investing in the long - term sustainability of their own processes. let me give you two examples of what the