andreas dombret : introductory statement - iif international capital markets and emerging markets roundtable introductory statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the iif international capital markets and emerging markets roundtable, washington dc, 20 april 2018. * * * ladies and gentlemen ever since the ground - breaking work of solow in the fifties most policy makers and members of academia – especially in the advanced economies – have inclined to favour free capital flows. many crises later, the view has somewhat shifted, in particular, regarding emerging markets and developing countries, which is the group of countries that i will focus my remarks on. not only can capital flow reversals and in the extreme form sudden stops create significant costs in terms of output losses, financial instability and even political instability. but from all we know today it is surprisingly difficult to find empirical evidence of capital account liberalization being beneficial in terms of output gains, investment, productivity gains, or risk sharing for countries that have not progressed sufficiently far in their institutional development. much of the work on this has been carried out by the imf and indeed by maurice obstfeld himself, so maurice should correct me if i am wrong, but essentially liberalized capital flows should go hand in hand with functioning judicial systems including well enforced property rights, developed and well regulated financial systems as well as stability - oriented macroeconomic policies. there are even longer lists, but these seem to be the minimum requirements. so, given that these conditions are not always met fully, should countries resort to capital flow measures if faced with volatile flows? by the way, i am using the imf terminology of capital flow measures. these are basically capital controls plus those macroprudential measures that aim to limit financial stability risks arising from cross - border capital flows. i think we all agree that sound domestic policies should always be the first line of defence and that capital flow measures should not substitute for warranted macroeconomic or exchange rate adjustments. but it is also useful to state an obvious but often overlooked fact : unlike restrictions on the current account, the imposition of capital flow measures is not under the jurisdiction of the imf, thus, any country can basically adopt such controls as it deems necessary to regulate capital movements. however, capital flow policies are part of the funds surveillance and as such open to an assessment of their impact on the international monetary system. objectives of capital flow measures usually are to maintain monetary independence, to mitigate exchange

, including, of course, germany and spain. according to our survey, apple pay is the most popular wallet service in germany. there is a danger for banks of being sidelined as interchangeable settlement agents. at the moment, bigtechs in europe rely on cooperation with banks for the settlement of payments. a payment made using apple pay or google pay is mostly settled via the credit card stored in the wallet, but issued by a bank. the next step could be to create closed payment systems that are no longer based on established payment instruments and actors. the idea here is to issue one's own " platform money ", notably in the form of a " stablecoin ". the most prominent example of such a concept was probably the diem initiative ( formerly known as libra ) launched by meta. stablecoins often peg their value to an existing currency or to a currency basket. moreover, their value is backed by suitable collateral. stablecoins therefore mimic the functions of money, owing to their dependence on widely accepted currencies. however, if the reserve assets are insufficient or if stablecoins can only be converted to other forms of money to a limited extent, this entails the risk of losses. the turbulences 2 / 6 bis - central bankers'speeches in the crypto market in recent months, during which stablecoins also lost massively in value, have shown just how high these losses can be. for instance, terrausd almost lost its full value compared with the us dollar. instabilities can also arise if many holders want to exchange their stablecoins back into " real " money due to a loss of confidence. in this case, a scenario similar to a typical bank run might occur. this risk might further increase as a result of strong interdependencies between stablecoins and other crypto assets in decentralised finance ( defi ) markets. in this context, europe is working at full speed to finalise the markets in crypto assets regulation – mica. with mica, the european union is creating a single european regulatory framework for crypto assets. mica will protect european customers investing in crypto assets and prevent misuse of crypto assets, while being innovation - friendly and maintaining the attractiveness and competitiveness of the european market. 3 speeding up existing infrastructures but legislation is only one part of the puzzle. what steps should we, as central banks, take in response to the challenges posed by digital