peer - to - peer electronic cash system ) : “ what is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. " i feel that too little attention is being paid to nakamoto ’ s primary goal of constructing a groundbreaking, trustless electronic payment system which, like cash, would facilitate peer - topeer ( p2p ) transactions. at the same time, nakamoto was looking to create a currency which was not based on trust. this aspect – forging a new currency that does away with central banks 1 / 5 bis central bankers'speeches – has become a major talking point in the current debate. i have come here today to explain why a trustless currency is not feasible, and i will also argue that the merits of blockchain can be harnessed more readily with trustworthy institutions than without. to get a grasp of bitcoin, we need to put our minds to the essence of money. there are two types of money. money as a commodity, and money as a claim. money as a commodity, that could be a commonly used consumer good which is mostly nonperishable. cigarettes, for instance, were used as a money substitute in germany after the second world war. but equally, money could be a durable good – gold being the most prominent example of this. gold is extraordinarily durable, and it has an intrinsic value as a sought after industrial metal, say, or as jewellery. indeed, for centuries, delivering gold was regarded as the ultimate form of settling a claim. consumer and durable goods which can be used as money substitutes both have an intrinsic, consumption or utility value. virtual currencies, meanwhile, which are transferred much like goods, are a fabrication. that is not to consign them straight to the category of “ fraud ". yet they have no intrinsic value, just an exchange value. you can ’ t consume or use them, only exchange them. on the other hand, there is money as a claim. the bulk of our money – central bank money and commercial bank money – is a claim on either the central bank or a commercial bank. every euro in cash and every euro in credit balances in target2represents a liability for the eurosystem. and the euro is backed by the eurosystem with its constituent central banks, one of which is the

contribute to their stability and efficiency. second, the bundesbank acts as a catalyst to forge improvements in payment operations and settlement structures. the better the bundesbank grasps the practical implications of technologies or processes, the more forcefully it will be able to present its arguments, which always aim to preserve the stability and enhance the efficiency of payment and settlement systems. third, the bundesbank monitors the stability of systems and tools used in the field of payments and settlement. being able to gauge the relative merits of state - of - the - art technology is a key skill in this regard. that is why the bundesbank – much like other central banks worldwide – has been putting a great deal of thought into dlt, even though this technology is still very much in its infancy. potentially, distributed data storage means that dlt can simplify reconciliation processes associated with complex work - sharing value added chains. dlt is seen as having disruptive potential since it generally allows transactions to be carried out directly – that is, without intermediaries. developed originally for the virtual currency bitcoin, dlt will nonetheless require extensive modifications if it is to be adapted to the needs of the financial sector. for one thing, the legal framework as it stands requires participants to be identifiable, transactions to be kept secret from third parties, and transactions to be settled with finality. for another, transaction throughput needs to be high. that said, some of the consensus mechanisms, as they are known, absorb so much time and energy that efficient settlement seems barely possible. furthermore, they require substantial additional data transfers, which adds to the costs. for comparison purposes, the bitcoin network, at its peak, settles roughly 350, 000 transactions worldwide every day, and given its current configuration, appears to be running at almost full capacity. the german payment system alone, meanwhile, processes more than 75 million transactions on average every business day, according to the data for 2016. the traditional answer to the problem of mounting complexity in the interactions of a multitude of independent participants has been to use a central bank – an institution which centralises the settlement of payment transactions. hence the name : central. bank. this arrangement channels the many different bilateral payment flows and order books into larger flows which are then routed via or by the central bank and posted in a central bank account. that was a huge step towards greater stability and efficiency in the world of payments. as a matter of fact, that is why we are seeing a