use of the initial margins will come into force in 2022 in application of the emir regulation, and should help contain such developments. and the esrb issued in june 2020 recommendations to address liquidity risks arising from margin calls. nevertheless, we should remain alert and critical in terms of supervisory actions and regulatory requirements to ensure that best practices are enforced. b ) the second issue is the sovereign - bank - corporate nexus european banks ’ ownership of sovereign debt has increased in the course of the year 2020. these developments, coupled with the massive public support targeting nfcs at the apex of the pandemic, and possibly the room for carry - trade offered by the current design of liquidity provided by the eurosystem through tltros, have raised some concerns about the sovereign - bankcorporate nexus. it is clear that in the future this nexus could give rise to vulnerabilities from a financial stability standpoint and we should remain vigilant about the negative feedback loop that it may facilitate. however these concerns should not be overstated. let me observe first that in the eurozone, these linkages between banks, sovereigns and corporates have been crucial for absorbing the economic and financial shocks created by the pandemic. second, the growth in the intensity of these interlinkages must be put into perspective. for 3 / 4 bis central bankers'speeches instance, relative to their total assets, banks ’ exposure to their domestic sovereign have only increased modestly and has remained well below their historical peak. and third, if the so - called bank sovereign “ doom loop ” was a significant threat for the eurozone after the great financial crisis, we must reckon that this time is different, and that this threat has been weakened. indeed, the pandemic crisis does not originate from banks, and banks are materially more resilient compared to what they were in 2008 thanks to the implementation of basel iii. and thanks to the implementation of the banking union in its various dimensions, spillover risks have been reduced. bail - in capacities of french banks for instance have significantly improved over the last decade, reducing the likelihood of a bail out – which would in any case be subject to the rules of the banking union ’ s resolution pillar. and finally, the possible negative impact on the financial stability outlook will crucially depend on the strength and sustainability of the recovery underway and the policies which will be implemented to preserve public debt sustainability. so let me stop there for these initial remarks. thank

his proactive engagement for making this mas - acpr - bdf cooperation flourish. francois was the right man in the right place to take up the challenge of launching and leading our rep office here, building notably on his former experience as head rep for the americas. your achievements francois are all the more remarkable when considering that you took office exactly when in person, face to face, interactions, were hampered for a long while by lockdown measures. i also want to give a very warm welcome to stephane latouche. building on his wide raging 1 / 4 bis - central bankers'speeches experience within and outside the bank, he will i am sure contribute to develop further the activities of our rep office with all of you, and notably deepen our bilateral ties with the mas, notably for future innovation partnerships. as a matter of fact, innovation never stops, innovation is above all change. financial innovation illustrates this time of rapid change, with a wave of new players, new digital assets in the form of crypto - assets, as well as new exchange and settlement infrastructures. among those digitalisation trends, so - called " decentralised finance ", defi, is emerging. defi is a set of applications offering financial services based on crypto - assets, operating on public blockchains and using smart contracts. we need as supervisors and providers of settlement services in central bank money to stay alert, explore its opportunities and address challenges it raises. ii. impact on bdf activities and stability mandate to that end we have been developing our actions along two axes that should serve as an additional basis for the dialogue and cooperation we have been developing from here in singapour. 1. the first axis is to move beyond the first generation of crypto - asset regulation indeed, the first generation of crypto - asset regulations does not fully address the challenges posed by defi. for example, in europe, fully " decentralised " services are excluded from the scope of the mica regulation. to go beyond this first step, we need to build a regulatory framework adapted to the specificities of defi. in my view, when designing this framework we should not try to replicate existing financial regulations at all costs. on the contrary, it could be advantageous to draw inspiration from regulations in other sectors. for example, one could imagine setting rules on " products " even when their " producer " or " issuer " is not clearly identified. in addition, we have to recognise the technical