denis beau : the perils and potential of digital currencies introductory remarks ( virtual ) by mr denis beau, first deputy governor of the bank of france, for the panel discussion on " the perils and potential of digital currencies ", at the raid ( regulation, artificial intelligence, internet & data ) digital 2023 on " bridging parallel lines ", 3 may 2023. * * * in order to set the scene, let me : put cbdc and stablecoins discussions and developments into the broader perspective of the transformation underway of financial services and of the financial sector. highlight the regulatory and supervisory issues they raise from a central banker perspective, from the perspective of an institution in charge of ensuring monetary and financial stability. to do this, i would like to make three points : first, cbdc and stablecoins are the prominent and most publicized output of the 3 major disruptions of finance that digital technologies are bringing about, namely : the arrival of new players, big techs and fintechs, which to date, have been subject to little or no regulation. the emergence of new forms of investment and settlement assets in tokenized form, usually referred to as crypto - assets. bitcoin is emblematic of a first generation of highly volatile cryptos, whose use remains essentially speculative. the second generation, stablecoins, aims to provide a broader range of services possibly with a global reach, with the support of mechanisms to stabilize their value against sovereign currencies. the emergence of decentralized market infrastructures, based on dlt and blockchains in particular. the combination of those 3 trends is translating into activities and services that first swept into the payment sector and are now spreading more broadly. among them, socalled decentralized finance, defi, is emerging as a crypto - based alternative to traditional finance, where the provision of services is claimed to be disintermediated and their governance decentralized, and is enabled notably by permissionless blockchains, smart contracts and decentralized apps. digital innovation therefore acts as centrifugal forces : they aim to create a movement of decentralisation that runs counter to the traditional architecture of the monetary and financial edifice, centralised around trusted institutions a€ “ the central bank, credit institutions and market infrastructures -. second, these decentralisation forces might have a two - sided impact on the functioning of our financial system, both in terms of efficiency

need robust recovery and resolution arrangements for ccps, to preserve financial stability in all circumstances. before i leave you to discuss this complex issue, i would like to offer a few thoughts : – the cornerstone principle of resolution is always financial stability : this should be achieved through the continuity of ccp services when possible, but not at the expense of the financial survival of ccp members and clients. – the permanent cost of such a regime should be assessed carefully in order to preserve incentives in favor of central clearing. ccps already have properly sized financial resources and a sound business model that must be preserved. – resolution arrangements should balance predictability for ccp participants and flexibility for the resolution authorities, whose task to preserve financial stability in the most extreme circumstances should not be hampered. – and lastly, cooperation between authorities and consistency at the international level are key to ensure efficient resolution planning and resolution actions, and to avoid regulatory loopholes and arbitrage. this conference is indeed illustrative of the spirit for further international cooperation in this field. thank you for your attention. i wish you a very fruitful conference. bis central bankers ’ speeches