guy quaden : the integration of the euro government bond market – standstill or restart? keynote address by mr guy quaden, governor of the national bank of belgium, at the third annual european government bond summit, brussels, 24 october 2008. * * * ladies and gentlemen, it is a great pleasure for me to be the guest speaker at this third annual european government bond summit. even in these turbulent times, i hope that you still enjoy your dinner and will have time to attend the conference tomorrow. its programme looks very interesting indeed, and closely reflects the current difficulties in the financial markets. the primary dealers community is now, maybe more than ever before, of great interest for central bankers. indeed, one of your main missions is to make sure there is enough liquidity in the government bonds secondary market. proper functioning of this market is crucial to ensure liquidity for financial institutions, via the collateralised interbank market among others. and this market has become increasingly important since liquidity in the unsecured interbank market has been drying up. owing to the high distrust among market participants, banks are still facing acute borrowing restrictions. this lack of market liquidity is one of the main problems with which central bankers are confronted at the moment. the eurosystem has adjusted its distribution of liquidity – and will continue to adjust it for as long as necessary – to ensure that solvent banks have continued access to liquidity and to keep the very - shortterm rates, in particular the overnight rate, as close as possible to the policy rate. the eurosystem has assumed an increasing intermediation role during this period of turbulence. with its actions and the guarantees offered by individual governments, conditions are in place for a pickup in confidence and a gradual reduction in tensions on the money market. since the beginning of the financial turmoil in the summer of last year, the ecb governing council has made a clear distinction between liquidity management and its monetary policy stance, which is signalled by the interest rate on the main refinancing operations. the dramatic worsening of the financial crisis since the collapse of lehman brothers radically modified the outlook for growth and, as a consequence of lower commodity prices and faltering domestic activity, our assessment of risks to price stability as well. therefore, the coordinated interest rate cut of 50 bp on 8 october was appropriate for the euro area. the governing council has thus shown that, without prejudice to its main objective of guaranteeing price stability in the medium term.

remedy market inefficiencies : this could be done in the area of international multi - currency payments, for example, with a view to improving the conditions under which individuals transfer funds abroad. diversifying project financing methods : a prime example would be icos, which have enabled swift and large - scale fundraising in the network technologies sector in the past two years. 3. yet for all that, can crypto - assets become true currencies that will revolutionise our payment system, providing the decisive innovation that will lead us to the cashless society that some people are predicting and even hoping for? for the time being, this seems unlikely because existing crypto - assets are far from perfect. as many central bankers have pointed out, today ’ s crypto - assets do not satisfactorily offer the qualities expected of a currency and cannot be considered as such : first, their value fluctuates enormously, preventing them from being used as units of account. as a result, very few prices are denominated in crypto - assets and not many large brick - and - mortar or online retailers accept bitcoin for example, although there are some exceptions [ i. e. showroomprive. com, france ’ s second largest flash sale web retailer, which has accepted bitcoins since 2014 ]. second, as intermediaries in exchanges, crypto - assets are far less effective than a currency with legal tender status, insofar as ( i ) their price volatility makes it hard to use them as a means of payment, ( ii ) they generate transaction fees that are far too high for simple retail transactions, and ( iii ) they offer no guarantee of a refund in the event of fraud. third, the fact that they have no intrinsic value means that they cannot be used to create trustworthy stores of value. in addition, crypto - assets may be conduits for financial risk, security risk and especially risks of cyber - attacks, money laundering and terrorist financing. these would represent major risks for users and hence for the orderly functioning of our payment system if crypto - assets were ever to play a major role in that system. ii - in this complicated context, with crypto - assets undergoing technical and economic trials that offer opportunities but also present material risks for our payment system, should we consider establishing a regulatory framework and supervisory approach and, if so, how should we go about this? 1 ) various courses of action