– adoption is likely to rise however. 4 another motive for considering cbdc is possible efficiency gains in cross - border payments. project dunbar, a partnership between australia, south africa, singapore, malaysia and the bis innovation hub, aims to explore the challenges and benefits of a common settlement platform for cross - border payments between multiple central banks using digital currencies. similarly, the “ mcbdc bridge ” project aims to improve cross - border payments by looking into 1 / 5 bis central bankers'speeches the potential of common interoperable platforms for multiple cbdcs. project partners from hong kong, thailand, china, united arab emirates and the bis innovation hub have already successfully set up a respective prototype platform. 5 to give you one last example, the united states is less advanced in its considerations, but seems to be picking up speed. in march, president biden signed an executive order to assess the risks and benefits of creating a cbdc, as well as other digital asset related topics. 6 3 challenges and opportunities associated with cbdc let us take a closer look at the potential challenges and opportunities of a central bank digital currency : cbdc would be a third form of central bank money alongside cash and bank reserves. if well designed, cbdcs could combine the improved efficiency provided by modern, digital processes in payments with the safety provided by a central bank in a single means of payment. consequently, we see various possible benefits of cbdc, if well designed : a cbdc could offer access to a safe, instant and efficient digital means of payment for all population groups, including less digitally savvy groups of society. it would also be beneficial if cbdc could support offline payments. people would benefit from a digital and cost - effective cash alternative to choose from. and cbdc could facilitate the emergence of a new digital eco system with full paneuropean reach and the availability of new services, resulting in possible productivity gains, for instance by providing digital money that could be used in programmable environments. more precisely, a cbdc could be suitable for completely new use cases in the “ internet of things ”. depending on the design of a cbdc, private actors could offer completely automated payments based on smart contracts. for example, electric car charging could be paid for immediately and without further intervention by the driver. this calls for new forms of collaboration : recently, jp morgan announced a partnership with siemens, bringing payments and products closer together. 7 however, if a cbdc were to

has been stagnant in the euro area since the crisis, while it has taken off in the us. so, we need a tfp shock in the euro area. i hope very much that this is what the european council will produce in december, based on president juncker ’ s input. this would not only benefit the euro area, it would also create positive spillovers for the rest of the world. the governance of structural reforms the argument i am making on the importance of structural reforms also has a further implication : if supply - side policies are necessary to empower demand - side policies, and stronger demand is today a precondition for higher inflation, it follows that we need to view structural policies as an equally essential part of the policy mix as fiscal policies. and this in turn has implications for governance of structural reforms. whereas fiscal policies are coordinated through strong rules, coordination on structural policies so far has been comparatively loose. we have more or less counted on the benevolence of policymakers to internalise the interest of the other participating countries. but insofar as reforms and inflation have become intertwined, these arrangements are no longer consistent with a monetary union based on price stability – if indeed they ever were. thus, euro area policy makers have a duty to coordinate structural and fiscal policies more closely. and in fact, they have a legal obligation to do so enshrined in the eu treaty. those euro area policymakers who believe that they are accountable only to their national parliaments have forgotten that they belong to a monetary union. there is quite some scope to strengthen coordination in the current framework, by enforcing in a more consistent way the european semester and the country specific recommendations, which are today barely considered in the national process. but i am convinced that we will also need to take a step forward. there would be many benefits if governments were to coordinate in a more binding way their structural policies, and this would be in their own interest and in the interest of the union. thanks a lot for your attention. bis central bankers ’ speeches